Hedge funds’ bullish bets on gold jump to four-year high
Hedge funds and other large speculators boosted their net-long position in gold.
The gold price on Monday gave up some of last week’s hard-won gains, sliding more than $16 to a day low of $1,269.20
In lunch time trade December gold futures were changing hands for $1,372.80, retreating from highs of $1,294 set Thursday last week following Fed chair nominee Janet Yelen’s comments on the bank’s stimulus program.
Losses in the volatile silver market was steeper with the metal losing 1.7% to $20.37, up from $20.30 earlier in the day. Silver is down 6.6% so far this month.
The precious metals weakness comes as institutional money continue to exit the market in droves.
Gold-backed ETF holdings of the metal dropped 7 tonnes last week to the lowest level since April 2010, while outflows from silver funds totaled 122 tonnes, the second biggest weekly reduction since June according to Saxo Bank.
Institutional investors, especially the leveraged types such as hedge funds have increasingly been growing impatient with gold’s prospects resulting in a doubling of the gross-short exposure through futures during the week ending November 12.
Ahead of Yellen’s speech which was broadly supportive of the Fed’s QE program, pushing out indefinitely any tapering of the $85 billion being pumped into financial markets each month, net longs in gold were cut by 36%.
Large investors are opting to put their clients’ money into the US stock market which continues to set new highs. In 2013, the Standard & Poor’s index of the 500 largest companies in the US, is up some 30%, while gold has retreated 24% from its opening levels of $1,677.
The extent to which investors have abandoned gold-backed ETFs is most striking when you consider the world’s largest gold ETF, SPDR Gold Shares (NYSE: GLD).
Holdings in the fund established November 2004 are now at their lowest level since February 2009 even though net redemptions have slowed dramatically from the torrid pace of earlier in the year.
As of Friday GLD has experienced year-to-date outflows of 485 tonnes to 865.7 tonnes, down just under 36% from the start of the year.
4 Comments
Ralph M. Ades
Where are the ETP’s going to buy physical gold when investors again start to buy the ETP shares? I doubt the Chinese will give up their newly found ounces easily.
Dutchmann64
…..the bit coin is going to be the spoiler/wild card moving forward.
Anthony Maw
Hmmmm….Let’s see: US high unemployment, permanent job losses, low interest rates, massive China real-estate bubble, ballooning government debts on both sides of the Atlantic with aging populations and declining birth rates, and best of all the same banksters who blew up the US financial system back in ’08 are still running the show….US endless QE money-printing to infinity fuelling the mother-of-all Wall-Street equity bubble….yeah I can’t get enough of the yellow stuff in my bank vaults…..
idontbeleiveit
If you ever hear anyone saying money doesn’t grow on trees. You can tell them that’s wrong because gold and dollars now have one thing in common, they both grow from trees. It seems scientists have now found gold on gum trees in Australia