Hedge Funds Lowered Bullish Bets on Gold

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For a fourth week, Bloomberg News has reported that hedge funds have lowered bullish bets on gold in the longest streak this year. The net position in gold slid 13 percent to 87,689 futures and options in the week ended Nov. 5, U.S. Commodity Futures Trading Commission data show. Short bets jumped 37 percent, the most since Oct. 15, and long wagers fell 4.9 percent. Combined holdings across 18 U.S.-traded commodities dropped 20 percent to 658,263 contracts as investors cut cotton positions to the lowest this year and crude-oil bets to the fewest since June and gold has tumbled 24 percent this year, heading for the biggest drop since 1981.

Ed Morse of Citigroup Inc. said in an April 14 report that, Commodity prices have become again negatively correlated to equities, and investors should take “seriously” the role of raw materials as a diversifier for portfolios. Investors have more than doubled bets on lower prices in the past month.

  

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A strategist at Standard Life in Edinburgh, which oversees $294 billion of assets, Frances Hudson, said that according to Bloomberg News, I see demand for gold remaining non-enthusiastic. Things are looking better in the U.S. and Europe. It’s not that both these economies are racing ahead, but they are gradually improving.” Hudson also reported that, “It is very difficult for gold to sustain the panic that makes it a good safe-haven trade.”

According to Global Market Financial review,  Barclays Plc and Credit Suisse AG are predicting lower commodity prices as supplies increase. There are signs, according to Bloomberg News,  of accelerating U.S. economic growth.

A Kansas City-based national consultant for U.S. Bank Wealth Management, which oversees about $115 billion, Dan Heckman, said according to Bloomberg News that, “Besides drought conditions it’s also being helped by changes in lifestyle and in demographics. Some of the commodities have strong fundamentals backing them, but gold is not our favorite place.”

Image Credit: www.globalmacrodigest.com