Hedge funds’ combined holdings in gold futures (COMEX:GCZ13) rose the most this month as continued U.S. monetary stimulus spurred investors to sell short contracts and sent prices toward the first quarterly advance in a year.
The net-long position in bullion jumped 12% to 78,654 futures and options in the week ended Sept. 24, the most since Aug. 27, U.S. Commodity Futures Trading Commission data show. Long wagers gained 1.8% and short bets fell 17%, the biggest drop in four weeks. Combined net-long holdings across 18 U.S.-traded commodities climbed 1.7%, the first gain in September.
Gold rose 8.2% this quarter after a slump into a bear market in April spurred sales of coins, jewelry and bars. The Federal Reserve refrained from trimming bond buying this month, surprising investors. The pace of purchases could remain steady at $85 billion a month into January as policy makers wait for more signs of economic recovery, Fed Bank of Chicago President Charles Evans said Sept. 27. Bullion rose 70% from December 2008 to June 2011 as the central bank bought debt.
“The Fed has made it clear that the economy is weak, and the stimulus spigot will be open full-bore,” said John Stephenson, who helps oversee about C$2.7 billion ($2.6 billion) at First Asset Investment Management Inc. in Toronto. “That means they’re continuing to inject more into the money supply, and that is a bullish argument for gold.”
Futures rose 0.5% to $1,339.20 an ounce on the Comex in New York last week. Gold rebounded 12% since reaching a 34-month low on June 28. It is still down 21% for the year, poised for its first annual retreat since 2000, as some investors lost faith in the metal as a store of value. The contract for delivery in December slid 1.1% to $1,324.60 at 9:23 a.m. in New York.
Seventeen traders and analysts surveyed by Bloomberg expect prices to rise this week, with seven bearish and three neutral. That’s the second consecutive bullish weekly survey, the first back-to-back positive outlook since July.
The Standard & Poor’s GSCI Spot Index of 24 commodities fell 0.4% last week and the MSCI All-Country World Index of equities slid 0.6%. The Bloomberg Dollar Index, a gauge against 10 major trading partners, slipped 0.1%, and the Bloomberg U.S. Treasury Bond Index gained 0.5%.