Traders increase bets that gold has further to fall
Net positioning in futures market in negative territory for first time since end of 2001
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Traders increase bets that gold has further to fall Net positioning in futures market in negative territory for first time since end of 2001 Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save to myFT Robin Wigglesworth, Joe Rennison and Gregory Meyer in New York August 17, 2018 Print this page 24 Traders have increased their bets against gold, with speculative positions in futures on the precious metal the most bearish in 17 years, according to government data released on Friday. The price of a troy ounce of gold has fallen another 3.3 per cent this month to a one-and-a-half year low of $1,182.90, extending this year’s tumble to more than 9 per cent. Although it enjoyed a bounce on Friday, fresh data from the Commodity Futures Trading Commission indicates that some investors think gold’s descent has further to go. The net positioning of “non-commercial” players in the gold futures market — a CFTC classification that includes hedge funds, asset managers and trading groups — has fallen into negative territory for the first time since the end of 2001. Gold has performed poorly as interest rates and the US dollar have risen this year, since it offers no yield and is more commonly bought as a “safe haven” when the greenback’s value is falling. The dollar has enjoyed a renaissance since this spring, thanks to the robust economy and the Federal Reserve’s rate increases, and the main US currency index hit a one-year high this week. Friday’s CFTC data also indicated that investor positioning in dollar futures is the most bullish it has been in a year. “It is all the dollar,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. At the same time, China’s economic slowdown has dented appetite for gold in Asia. “Escalating trade tensions, a slowdown in Chinese activity and continued dollar strength were the main factors driving the sharp sell-off in both base and precious metals so far,” JPMorgan’s analysts said in a note to clients on Friday. Recommended Markets Insight John Authers Why gold tells us this EM crisis is all about the dollar The CFTC’s more granular “managed money” gold futures positioning category — which is mostly made up of hedge funds — has been in negative territory since the last week of June, and fell to a record net short position of 83,000 contracts. But some investors see the CFTC data as a contrarian measure. “When you see this extreme positioning on the short side it leads to a bottom in gold . . . It’s a great sign that a gold bottom is very near,” said Mr Boockvar, a longstanding bull on gold.
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