Hedge funds cut bets on a gold rally by the most since February after the Federal Reserve laid out plans for reducing stimulus and this year’s drop in the value of exchange-traded products extended to $54 billion.
Speculators reduced their net-long position by 29 percent to 38,951 futures and options by June 18, U.S. Commodity Futures Trading Commission data show. Holdings of short contracts jumped 14 percent, the most in eight weeks. Net-bullish wagers across 18 commodities slid 2.2 percent as investors became more bearish on copper and wheat.
Fed Chairman Ben S. Bernanke said last week that the central bank may slow its bond-buying program if the U.S. economy continues to improve, driving bullion to its lowest since 2010. Gold, which tumbled into a bear market in April, is poised for more declines, according to Credit Suisse Group AG and Societe Generale SA. Investors cut their holdings through ETPs by 20 percent this year, on pace for the first annual drop since the products were introduced in 2003.
“There’s certainly a rush to the exits in gold,” said Jim Russell, a senior equity strategist in Cincinnati at U.S. Bank Wealth Management, which oversees about $110 billion of assets. “The nudge up in the Fed’s expectations economically suggests they may unwind their program a little quicker than investors thought.”
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