Hedge funds increased their bets on a gold rally, just before prices fell for a second week as an accelerating U.S. economy outweighed concern that violence between Russia and Ukraine will escalate.
Money managers increased their net-long position by 3.1 percent in the week through July 22, U.S. government data show. Two days later, prices dropped to a five-week low amid declining demand. Purchases by China, the world’s biggest user, fell 19 percent in the first six months of the year.
Gold futures are headed for a July decline after rallying 10 percent in the first half of the year, a gain that outpaced broad measures of commodities, equities and treasuries. While buying was fueled by tensions in Ukraine and the Middle East, signs of U.S. growth reduced the appeal of bullion as an alternative asset. Americans filing for unemployment insurance payments held near an eight-year low in the week ended July 19, and consumer sentiment was at a three-month high.