Hedge Funds Return to Gold Dump Copper

Hedge funds raised bullish gold wagers by the most since July and sold copper holdings as emerging-market turmoil boosted concern the global economy will slow and increased demand for precious metals as a haven.

The net-long position in gold jumped 40 percent to 60,672 futures and options in the week ended Jan. 28, U.S. Commodity Futures Trading Commission data show. Long wagers rose 5.5 percent to the highest since September, and short bets dropped 16 percent. Net-bullish copper holdings tumbled 62 percent as shorts gained by the most in 11 weeks.

About $1.9 trillion was erased from the value of global equities last month as China’s economy slowed and the Federal Reserve further cut stimulus on Jan. 29. South Africa’s central bank increased interest rates, Turkey more than doubled them and Argentina’s peso dropped 19 percent against the dollar in January, more than any other currency tracked by Bloomberg. The tumult drove gold to its first monthly gain since August and copper to the worst start to a year since 2010.

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