Hedge funds lowered bullish gold (COMEX:GCU13) bets for the first time in five weeks as signs of accelerating U.S. growth contributed to the longest retreat in prices in a month.
Money managers cut their net-long position by 6.5% to 65,517 futures and options by July 30, U.S. Commodity Futures Trading Commission data show. Holdings of short contracts rose 6.8%, the biggest increase in six weeks. Net-bullish bets across 18 U.S.-traded commodities contracted 15% as investors cut wagers on higher crude prices for the first time in a month and more than doubled bearish bets on copper.
The U.S. economy grew at a faster pace than previously forecast in the second quarter, the Commerce Department said July 31. Manufacturing expanded in July at the fastest pace in more than two years, and the unemployment rate dropped to the lowest since December 2008, government reports showed last week. Gold tumbled 22% this year as U.S. expansion prompted speculation the Federal Reserve taper stimulus.
“The economy is healing, and if the economy is healing then it doesn’t require the assistance of the Fed,” said John Stephenson, who helps oversee about C$2.7 billion ($2.6 billion) at First Asset Investment Management Inc. in Toronto. “Whether tapering happens tomorrow or next year, it’s coming, and the market knows it.”
Gold futures declined 0.9% last week, the first drop since the week ended July 5. Prices capped a four-day losing streak on Aug. 2, the longest since June 27. Twelve analysts surveyed by Bloomberg expect the metal to fall this week, nine are bullish and four neutral, the first time the bears have dominated in six weeks.
The Standard & Poor’s GSCI Spot Index of 24 commodities lost 1.3% this year. The MSCI All-Country World Index of equities advanced 11% as U.S. equities reached a record. The Bloomberg Dollar Index, a gauge against 10 major trading partners, rose 4.4% and the Bloomberg U.S. Treasury Bond Index dropped 2.6%.
U.S. gross domestic product climbed at a 1.7% annualized rate in the three months ending June 30 after a 1.1% increase in the prior quarter, government data show. The figures signaled the Fed may begin curbing its $85 billion of monthly debt purchases in September, Eric Green, an economist at TD Securities Inc. said in a report July 31.
Holdings in global exchange-traded products backed by the metal dropped 25% this year to the lowest since May 2010, erasing $59.4 billion from their combined value. Bullion rose 70% from December 2008 to June 2011 as the Fed bought more than $2 trillion of debt.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.