Hedge Funds Continue to Cut Gold Positions

Hedge funds are the least bullish on gold since 2007 as signs of faster U.S. economic growth bolster the case for the Federal Reserve to trim stimulus and cut demand for haven assets.

The net-long position in gold fell 16 percent to 26,774 futures and options in the week ended Dec. 3, the lowest since June 2007, U.S. Commodity Futures Trading Commission data show. Short bets rose 6.2 percent to 79,631, within 0.6 percent of the record reached in July. Net-bullish wagers across 18 U.S.-traded commodities climbed to a four-week high. The Standard & Poor’s GSCI gauge of 24 raw materials capped the biggest weekly gain since August as faster economic growth boosted prospects for energy, metals and grains consumption.

Gold is heading for the biggest annual decline in three decades as equities advance and inflation slows. The U.S. unemployment rate reached a five-year low in November and third-quarter economic growth exceeded analyst estimates, government reports showed last week. The share of economists predicting the Fed will taper bond purchases this month doubled after the jobs report Dec. 6. Bullion reached a record in September 2011 as the Fed pumped more than $2 trillion into the financial system.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza