Hedge funds are the least bullish on gold (COMEX:GCG14) since 2007 as signs of faster U.S. economic growth bolster the case for the Federal Reserve to trim stimulus and cut demand for haven assets.
The net-long position in gold fell 16% to 26,774 futures and options in the week ended Dec. 3, the lowest since June 2007, U.S. Commodity Futures Trading Commission data show. Short bets rose 6.2% to 79,631, within 0.6% of the record reached in July. Net-bullish wagers across 18 U.S.-traded commodities climbed to a four-week high. The Standard & Poor’s GSCI gauge of 24 raw materials capped the biggest weekly gain since August as faster economic growth boosted prospects for energy, metals and grains consumption.
Gold is heading for the biggest annual decline in three decades as equities advance and inflation slows. The U.S. unemployment rate reached a five-year low in November and third- quarter economic growth exceeded analyst estimates, government reports showed last week. The share of economists predicting the Fed will taper bond purchases this month doubled after the jobs report Dec. 6. Bullion reached a record in September 2011 as the Fed pumped more than $2 trillion into the financial system.
“Gold is experiencing the flip side of some of the euphoria that it had from 2009 to 2011,” said Sameer Samana, a St. Louis-based strategist at Wells Fargo Advisors LLC, which oversees about $1.3 trillion of assets. “People are experiencing buyers’ remorse as they look for other places to try to store value. Until the market is more concerned about inflation, gold will have a tough time getting traction.”
Futures in New York reached $1,210.10 an ounce on Dec. 6, within $30.70 of this year’s low reached in June. Sixteen analysts surveyed by Bloomberg News expect gold to fall this week, 11 are bullish and two neutral. The analysts were bearish for a third week, the longest stretch since February 2010.
Bullion tumbled 26% this year, heading for the biggest annual slump since 1981. The S&P GSCI gauge of 24 commodities dropped 2.3%. The MSCI All-Country World Index of equities gained 18%, while the Bloomberg Dollar Index, a gauge against 10 major trading partners, rose 3%. The Bloomberg Treasury Bond Index fell 2.8%.
Global holdings in exchange-traded products backed by bullion tumbled 31% this year to the lowest level since February 2010, erasing $69.5 billion from the value of the assets.