Hedge funds cut bullish gold wagers on Fed outlook

Hedge funds cut bullish gold bets, adding the most short contracts in four weeks, as U.S. economic growth fuels speculation the Federal Reserve will trim quantitative easing. Holdings across commodities dropped the most since April.
NOV 15, 2013
Hedge funds have cut bullish gold bets, adding the most short contracts in four weeks, as U.S. economic growth fuels speculation the Federal Reserve will trim stimulus. Holdings across commodities dropped the most since April. The net position in gold slid 13% to 87,689 futures and options in the seven-day period ended Nov. 5, Commodity Futures Trading Commission data show. Short bets increased 37%, the most since Oct. 15, and long wagers fell 4.9%. Combined holdings across 18 U.S.-traded commodities dropped 20% to 658,263 contracts as investors cut cotton positions to the lowest this year and crude-oil bets to the fewest since June. Gold has tumbled 23% this year, heading for the biggest drop since 1981, as some investors lost faith in the metal as a store of value. U.S. payrolls in October rose more than forecast, and the economy expanded at a faster pace than estimated last quarter, government reports showed last week, reviving concern the Fed may curb bond buying that helped fuel growth. Barclays PLC and Credit Suisse AG are predicting lower commodity prices as supplies increase. The “U.S. economy is showing ample signs that it is growing, and that means the Fed will start looking at tapering either at the end of this year or early next,” said Dan Heckman, a national consultant for U.S. Bank Wealth Management, which oversees about $112 billion. “We are underweight on commodities as the support of stimulus will go away at a time when supplies are rising and worries about Europe are increasing.” Futures tumbled 2.2% to $1,284.60 an ounce last week on the Comex in New York. Prices, which slumped into a bear market in April, are poised for the first annual drop since 2000. From December 2008 to June 2011, gold rose 70% as the Fed pumped more than $2 trillion into the financial system by purchasing debt. Fed Bank of Atlanta President Dennis Lockhart said Oct. 8 that the central bank will consider reducing its $85 billion of monthly bond buying at the December policy meeting. The Standard & Poor's GSCI Spot Index of 24 commodities fell 0.4% last week, matching the slide in the MSCI All- Country World Index of equities. The Bloomberg Dollar Index, a gauge against 10 major trading partners, rose 0.6%, and the Bloomberg U.S. Treasury Bond Index lost 0.5%. Bullion will probably hold near $1,300 until year-end and then decline to $1,050 at the end of 2014 as an improving U.S. economy prompts less stimulus, The Goldman Sachs Group Inc. wrote in a report on Oct. 18. (Bloomberg News)

Latest News

GLP-1 users are trading retirement savings for their prescriptions
GLP-1 users are trading retirement savings for their prescriptions

A Nationwide survey finds 47% of GLP-1 users have never discussed the drugs’ financial impact with an advisor, even as many dip into savings.

Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors
Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors

The hundreds of millions of dollars from a sale of Inspired Healthcare properties does not mean an immediate windfall for investors.

Class action alleges Webull misled investors about China operations
Class action alleges Webull misled investors about China operations

Its SEC filings said one thing - a congressional probe said another.

Investors accuse Netcapital of inflating revenue through sham deals
Investors accuse Netcapital of inflating revenue through sham deals

Sham agreements allegedly padded revenue by 345%.

Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli
Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli

"Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help," said Chris Bailey of Cerulli.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor