Gold News

Gold Price Slips $5 But 2019 Rate Outlook 'Supports', Hedge Funds Slash Bearish Betting on Comex

GOLD PRICES gave back a $5 rise in US Dollar terms after recovering last week's closing level in London on Tuesday, trading down at $1244 per ounce as world stock markets rallied, government bond prices edged back, and the British Pound steadied on the FX market after Monday's latest Brexit-crisis slump.
 
Stabilizing above $1.26 in US Dollar terms, Sterling held the UK gold price in Pounds per ounce above £990, some £6 shy of yesterday's 14-month high.
 
Prime Minister Theresa May meantime met European Union leaders to try and renegotiate the Irish "backstop" – the open-ended commitment to EU rules which forced her to cancel Parliament's "meaningful" vote on her Brexit deal for fear of a crushing defeat.
 
Data released overnight showed hedge funds and other speculators slashing their bearish betting on Comex gold futures and options last week.
 
As a group, the so-called Managed Money category made the fastest positive jump in its positioning since those traders pulled back from a record-heavy bearish position in mid-October.
 
Chart of Managed Money net Comex gold futures and options position. Source: BullionVault via CFTC
 
Hedge funds also slashed their bearish betting against silver last week, cutting the net negative position by 30% to a 4-week low.
 
Silver prices over that period rose 1.4% as gold added 0.7% in US Dollar terms.
 
The price of platinum in contrast continued to fall, losing 3.7% over the week-ending Tues 4 December as the Managed Money slashed what had been a net positive position very nearly to zero.
 
"Platinum pricing remains heavy underneath $800," says a trading note today from MKS Pamp, the Swiss refiners and finance group, "and it is difficult to see and drivers for a move back above the figure."
 
Over on the interest-rate market, speculators have meantime slashed their betting on 3 or more US Fed rate hikes by this time next year from 59.8% to just 16.1% likelihood according to data from the CME  futures exchange.
 
Next week's widely expected rate hike to a ceiling of 2.50% "will be the last one for a long time" reckons Paul Tudor Jones of the $4bn Tudor Investment Corp.
 
"Fed funds futures pricing," agrees Chinese-owned bullion bank ICBC Standard's analyst Marcus Garvey, "has been reducing the market expectations for hikes over the next 18 months and that has been coming through in a slightly softer Dollar and a stronger gold price."
 
Over in India gold priced in the weakening Rupee rose Tuesday back towards October's 27-month highs – costing INR 32,650 per 10 grams after accounting for the No.2 gold consumer nation's 10% bullion import duty – as opinion polls said the ruling BJP Party is facing its biggest regional election defeat since leader Narendra Modi become Prime Minister in 2014.
 
A Canadian ex-diplomat was meantime arrested today in No.1 gold miner, importer and private consumer China, reportedly in a tit-for-tat response to the Toronto court hearing for extradition to the United States of tech-giant Huawei executive Meng Wanzhou.

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals