Hedge fund gold positions defy worst slump in 33 years

Central Bank

Central banks are divided on whether the metal is cheap enough to increase investment. Sri Lanka’s central bank governor said April 16 falling prices are an opportunity for nations to raise reserves. Reserve Bank of Australia’s assistant governor, Guy Debelle, said at a lunch in Canberra the same day that gold has no “intrinsic value.”

Money managers took $3.7 billion from commodity funds in the week ended April 17, said Cameron Brandt, the director of research for Cambridge, Massachusetts-based EPFR Global, which tracks money flows. Outflows from gold and precious-metals funds totaled $3 billion, he said.

Investors are holding a net-long position in silver of 7,694 contracts, the CFTC data show. That compares with a short position of 560 a week earlier and is the most bullish outlook since Feb. 26. The funds trimmed their net-short holding in copper to 27,412, from 32,850 a week earlier.

Crude Wagers

Wagers on a rally in crude oil slid 6.8% to 183,032 contracts, the second consecutive drop, the CFTC data show. Bullish platinum holdings slumped 9.3% to 20,005, the lowest since August. Those for palladium retreated 16% to the lowest since mid-January.

A measure of speculative positions across 11 agricultural products surged 87% to 105,246 contracts, the biggest jump since September 2006. Holdings a week earlier reached the lowest in more than six years. Soybean wagers jumped 19% to 74,569, the largest gain since Feb. 5, and hog holdings are at the highest in seven weeks. Bullish corn bets gained for the first time in three weeks.

Cold, wet weather delayed corn and soybean planting across the U.S. Midwest. Sowing of the grain on April 14 was 2% completed, the slowest since 1993, government data show. U.S. soybean sales since Sept. 1 are 13% higher than a year earlier. China is the largest buyer of the oilseed, used to make cooking oil and animal feed.

“Agriculture is going to be very weather-dependent, and the change in diet in China will support demand,” said Jeffrey Sica, who helps oversee more than $1 billion as the president of SICA Wealth Management in Morristown, New Jersey. “For gold, until we see a meaningful decrease in the short positions, it’s going to be very volatile. It’s no longer a safe haven, but a momentum investment.”

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