Gold traders are the most bearish in more than a year on mounting speculation that improving economic growth from the U.S. to China will curb demand for this year’s worst-performing precious metal.
Twenty analysts surveyed by Bloomberg this week expect prices to fall next week, while 11 were bullish and three were neutral, making the proportion of bears the highest since Dec. 30, 2011. Hedge funds cut bets on higher prices by 56% since October and are approaching their least bullish stance on gold since August, government data show. The metal fell to a five-month low today, and billionaire investors George Soros and Louis Moore Bacon reported yesterday that they had reduced stakes in exchange-traded products backed by gold.
First-time jobless claims in the U.S. decreased more than estimated last week, while a Chinese government-backed survey showed manufacturing expanded in January. Growth will accelerate in the world’s two largest economies in coming quarters, according to more than 100 economists surveyed by Bloomberg. Investors cut record bullion holdings in exchange-traded products this year and added to funds backed by other precious metals that are used more in industry.
“The global economic recovery is on track,” said Andrey Kryuchenkov, a commodity strategist in London at VTB Capital, a unit of Russia’s second-largest lender. “The persistently decent macro data is denying gold its usual safe-haven properties. You can get better returns elsewhere.”
Gold prices that rallied the past 12 years will probably peak in 2013, or already have, according to Goldman Sachs Group Inc. and Credit Suisse Group AG.
The metal fell 4.4% to $1,602.90 an ounce in New York this year, and reached $1,596.70 today, the lowest since Aug. 15. Gold climbed 7.1% last year in the longest annual rally in at least nine decades. The Standard & Poor’s GSCI gauge of 24 commodities is up 4.2% this year and the MSCI All-Country World Index of equities gained 4.7%. Treasuries lost 0.9%, a Bank of America Corp. index shows.
Gold’s drop compares with a 1.2% loss for silver this year. Platinum and palladium rose at least 6.8% on concern mine supply will fall as demand increases. An ounce of platinum bought as much as 1.054 ounces of gold yesterday, the most in 17 months, data compiled by Bloomberg show. Industrial usage accounts for about 10% of bullion consumption, compared with more than half for the other three metals.