Gold Speculators Reduce Positions by 13%

Investors are exiting the gold market on speculation that signs of sustained U.S. economic growth will push the Federal Reserve closer to raising interest rates, cutting demand for bullion as an inflation hedge.

Hedge funds reduced their bullish gold bets for the third time in four weeks, and open interest in New York futures and options are near the lowest in five years, U.S. government data show. Prices tumbled 2 percent last week, the most since late May, erasing $1.2 billion from the value of exchange-traded products backed by bullion.

Gold has dropped 5.1 percent from 16-week high in mid-July on gains for U.S. housing and manufacturing. Federal Reserve Chair Janet Yellen said Aug. 22 that if economic progress “continues to be more rapid than anticipated,” an interest-rate increase could come sooner than currently expected. Bullion tumbled 28 percent last year as the central bank started reducing bond buying.

via Bloomberg

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