Bullish Gold Bets by Funds Slump on Worst Price Slide Since 1997 (Bloomberg)
January 24, 2011, 12:08 AM ESTBy Pham-Duy Nguyen
Jan. 24 (Bloomberg) -- Hedge funds are unloading bullish bets on gold as a slide in prices sends the metal to its worst start to a year since 1997. Holdings in silver dropped to the lowest since February.
Managed-money funds held net-long positions, or wagers on rising prices, totaling 134,473 contracts on the Comex in New York as of Jan. 18, U.S. Commodity Futures Trading Commission data showed on Jan. 21. The gold holdings have plunged for three straight weeks, dropping 21 percent since the end of December, while net-long positions in silver are down 24 percent.
Gold has fallen 5.7 percent this month, which would be the worst start to a year since a 6.3 percent drop in January 1997. The metal rose every year for the past decade, reaching a record of $1,432.50 an ounce on Dec. 7 as central banks kept interest rates low and Europe’s debt crisis spurred demand for the metal as a haven. Silver climbed 84 percent last year and reached a 30-year high of $31.275 an ounce in New York on Jan. 3.
“From a technical standpoint, we’ve a strong rally in silver and gold, and when you have that type of performance, it prompts profit-taking,” said Brian Hicks, who helps manage $1 billion in the Global Resources Fund at U.S. Global Investors Inc. in San Antonio. “Money is going elsewhere to the more traditional areas of the equity market.”
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