Gold News

Gold Prices Lower on “Uneventful Monday,” Support from Hedge-fund Managers

GOLD PRICES have dipped below $1,300 this Monday afternoon. European stock markets rose following Asian gains. Analysts have referred to today as an “uneventful Monday”.

The single European currency trades Monday morning slightly lower, remaining in a tight range below $ 1.3400.

Reports of the destruction of an armed Russian convoy by Ukrainian troops on Friday pushed Brent oil up by one US dollar before coming back to trade below $103 per barrel as rumours seemed to be false, with Russia denying having crossed the border.  

Gold is expected to carry on “range trading… unless all the tensions in the world are sorted out,” says David Govett from Marex Spectron. “Gold is not the perfect safe haven … but it does knee jerk react to headlines and, as such, the downside should be limited for the time being,” he added.

In the Comex market of gold futures and options, gold’s bullish net position increased nearly 20% to 556 tonnes, the biggest jump for the last 8 weeks. The open interest gained for the first time in the last three weeks.

Silver cut the speculative net long position for the 4th week running.

Paulson & Co, the largest investor in the SPDR Gold Trust, maintained its stake in the exchange traded fund at 10.23 million shares in the three months ending June 30, as shown in US Government filings. This is the fourth consecutive quarter of unchanged holdings.

Another hedge fund giant, Soros Fund Management LLC, decreased its stake in Barrick Gold by more than 90% in the second quarter while it “nearly doubled” its ownership in the Gold Miners ETF and  initiated stakes in Allied Nevada Gold Corp, according to Reuters information.  

Axel Merk, chief investment officer of Merk Funds, considers that these actions underline that gold “has become increasingly attractive to hedge fund managers who are long-term investors as real interest rates remain negative.”

Gold closed its Monday’s trading session on the Shanghai Gold Exchange with a premium of $ 1.3 over the spot gold benchmark price in London. Reuters reports that physical demand in major buyers China and India has been weak with many consumers expecting prices to fall further. Bullion traders are expressing their worries that demand “might not pick up in the second half of the year, when it is normally stronger”.

This week’s macro data include US and UK CPIs plus the release of the FOMC minutes on Wednesday, which, according to analysts, should continue to reflect sustained improvement of the US economy, “and could give us a better idea of the Fed’s policy normalisation plan”. The Jackson Hole Symposium will start on Thursday, gathering central bankers from all around the world. This year’s title for the meeting is “Re-evaluating Labour Market Dynamics”. The US Fed Chairwoman, Janet Yellen, will speak on Friday.

Maria Vengut was the former Head of Customer Services at BullionVault and was also responsible for the Spanish and Latin American markets. She was the Editor of Noticias Oro. Maria joined the company in October 2011 and left in 2022.

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