Hedge
funds increased bets on a gold rally by the most in three weeks as central
banks signaled no end to economic stimulus, driving prices higher just as
analysts and traders turned the most bearish in three years.
The
funds and other large speculators raised their net-long position by 19 percent
to 54,762 futures and options as of April 30, U.S. Commodity Futures Trading
Commission data show. Holdings of so-called short contracts retreated 9.2
percent, the most since March 19. Net-bullish wagers across 18 U.S.-traded raw
materials jumped 28 percent to 550,182, the biggest increase in seven weeks,
led by gains in soybeans, cocoa and crude oil.
Gold
rallied 4.9 percent in the past two weeks after entering a bear market April
12. The Federal Reserve raised the prospect of increasing its monthly bond
buying on May 1 and the European Central Bank cut borrowing costs to a record
low the next day. Billionaire investor Warren Buffett said the metal has no
appeal even after the slump, and a weekly Bloomberg survey of analysts and
traders was the most bearish since February 2010.
Futures
climbed 0.7 percent to $1,464.20 an ounce on the Comex last week. Prices
rebounded 11 percent since reaching a two-year low on April 16. The Standard
& Poor’s GSCI Spot Index of 24 commodities rose 1.4 percent last week, and
the MSCI All- Country World of equities gained 1.7 percent. The dollar slid 0.5
percent against a basket of six major peers, and a Bank of America Corp. Index
shows Treasuries fell 0.4 percent. Gold was 0.4 percent higher at $1,469.70 by
7:55 a.m. in Singapore today.
The
Fed said at the end of a two-day policy meeting in Washington last week it’s
“prepared to increase or reduce the pace of its purchases” of $85 billion in
debt a month. Gold surged 66 percent since the end of 2008 as the Fed was
joined by central banks in Europe and Japan in printing unprecedented amounts
of money, almost doubling sovereign debt to more than $23 trillion, a Bank of
America index shows.
(Source: Bloomberg)
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