Gold bulls cut positions on signs U.S. growth quickens

Quantitative Research

Gold prices added 7.3% in July, the biggest monthly gain since January 2012. The rally was “nothing more than a correction to an ongoing downtrend,” Societe Generale analysts said in a note Aug. 1. They expect “large-scale” selling in ETFs to continue through 2014.

Money managers added $51 million to commodity funds in the week ended July 31, according to Adam Longenecker, the director of quantitative research for Cambridge, Massachusetts-based EPFR Global, which tracks money flows. That’s the first inflow since Feb. 6.

Net-long positions in crude oil declined 4.6% to 318,819 contracts, the first drop since June 25, the CFTC data show. West Texas Intermediate, the benchmark U.S. grade, advanced 2.1% to $106.94 a barrel last week.

Investors more than doubled their net-short holdings in copper to 26,924 contracts, compared with 12,974 last week, the CFTC said. Supplies will top demand by 107,000 metric tons this year, and the surplus will expand to 387,000 tons in 2014, Barclays Plc estimates. Futures rose 2.2% to $3.1725 a pound last week.

A measure of net-long positions across 11 agricultural products declined 46% to 57,552 futures and options, the biggest loss since April 2, government data show. The S&P GSCI Agriculture Index of eight commodities dropped 1.1% last week, extending this year’s loss to 19%.

Corn Bets

Investors are holding a net-short position in corn of 108,089 contracts, the most bearish since the data begin in 2006, CFTC data show. Wet weather across the Midwest may boost yields, and the U.S. Department of Agriculture projects a record harvest of 13.95 billion bushels. Prices reached the lowest since October 2010.

“We’re not expecting tremendous increases in the overall commodity complex,” said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees about $112 billion of assets. “Because of the high prices we’ve seen over the past 10 years, we’ve gotten the supply response that one should expect. This is going to keep a bit of a lid on commodity prices in the near term.”

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