Hedge Funds Reducing Gold Exposure

June 24, 2013 Debbie Jacobs Economic Barometer

Hedge Funds Unloading Gold

Hedge Funds Unloading Gold

The Federal Reserve’s announcement that it will reduce stimulus activity, combined with the recent slip in the value of exchange-traded products sent hedge funds to cut their bets on gold.

It is the largest reduction in gold exposure since last February, lowering investor net-long positions by 29 percent, down to 38,951 futures and options by June 18, according to data from the US Commodity Futures Trading Commission. Short contracts holdings climbed by 14 percent, the biggest upward move in 8 weeks. Bullish bets for 18 commodities shrank by 2.2 percent as investors are becoming more skittish on wheat and copper.

Last week Chairman Ben S. Bernanke of the Federal Reserve said that there is likelihood that the central bank will slow-down its bond-buying program in response to the continuing improvement in the US economy. This news sent gold crashing to its lowest price since 2010.

“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.”

Ben S. Bernanke, Federal Reserve, Gold,

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