Gold Investors Caught By Fed Easing Continuing

Gold speculators misjudged prices for a second consecutive week as the prospect of less stimulus from the Federal Reserve pushed futures lower.

Money managers raised their net-long position by the most since February in the week ended May 6. The next day, prices fell the most three weeks after Fed Chair Janet Yellen said the U.S. central bank’s four cuts in monthly bond purchases since November were “appropriate” because there is “sufficient underlying strength” in the domestic economy.

In the 14 weeks since January, investors have a track record of 50 percent, betting wrong on gold seven times. Prices that reached a six-month high on March 17 have retreated as much as 8.9 percent. Yellen told Congress on May 7 that while borrowing costs will be close to zero for a “considerable time,” policy makers will continue to reduce the pace of asset purchases in “measured steps.”

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