Speculators got less bullish on gold, selling long contracts at the fastest pace this year as prices fell the most in almost three months on prospects for less central-bank stimulus. Goldman Sachs Group Inc. said the retreat has further to go.
The net-long position held by hedge funds and other large speculators fell 16% to 84,929 futures and options in the week ended Sept. 10, U.S. Commodity Futures Trading Commission data show. Long holdings dropped 10%, the most since December, and short bets increased 9.8%. The net-bullish position across 18 U.S.-traded commodities slid 4.1%, with investors adding to bearish wagers on wheat and corn.
Gold resumed its retreat, heading for the first annual loss in 13 years, after coming within 3 percentage points of a bull market on the threat of military strikes on Syria. The U.S. and Russia agreed Sept. 14 on a plan for Syria to surrender its chemical weapons. Speculation Federal Reserve Vice Chairman Janet Yellen will become the next head of the central bank after former Treasury Secretary Lawrence Summers withdrew his name may support gold this week before a Fed meeting that economists expect will curb stimulus.
“The market is trying to find a price for gold in an environment where the Fed begins cutting back its assistance,” said Donald Selkin, who helps manage about $3 billion of assets as chief market strategist at National Securities Corp. in New York. “The temporary sparkle that we had seen because of Syria is disappearing.”
Futures slumped 5.6% (COMEX:GCZ13) to $1,308.60 an ounce last week in New York. Gold retreated 21% this year as some investors lost faith in the metal as a store of value, erasing almost $59 billion from the value of exchange-traded products and spurring at least $26 billion in writedowns by mining companies. Fifteen analysts surveyed by Bloomberg expected prices to fall again this week, with seven bullish and three neutral. It was the most bearish survey since June 21.
The Standard & Poor’s GSCI gauge of 24 commodities declined 2.2% last week, the most since June, led by gold and a 9.1% drop in silver that was the biggest loss since June. The MSCI All-Country World Index of equities climbed 2.2% and the Bloomberg Dollar Index, a gauge against 10 major trading partners, slipped 0.7%. The Bloomberg U.S. Treasury Bond Index rose 0.3%. Gold futures rose 0.8% today to $1,319.