Funds raise gold wagers as Goldman sees drop

ETP Holdings

Investor holdings through ETPs fell 33% in the past year, erasing $71.5 billion from the value of the funds, data compiled by Bloomberg show. Billionaire John Paulson, the largest holder in the SPDR Gold Trust, said in November that he personally wouldn’t invest more money into his bullion fund because it’s not clear when inflation will quicken.

“The concern is that the good economic news means the Fed will pull its taper off faster than people expect,” said Dan Denbow, a fund manager at the $950 million USAA Precious Metals & Minerals Fund in San Antonio. “What’s going to drive gold higher would be more concerns about geopolitical risks, an inflation scare and just a lack of good news. We still don’t see that happening.”

Bullish bets on crude oil slipped 7.1%, government data show. Prices climbed 1.8% last week. Stockpiles in the U.S., the biggest oil-consuming nation, reached 350.2 million barrels as of Jan. 10, the lowest since March 2012, Energy Information Administration data show.

Copper Wagers

Speculators pared their net-long position in copper (COMEX:HGH14) by 27% to 25,664 contracts, the lowest since mid-December. Prices in New York capped the first weekly gain this year as signs of quickening economic growth boosted the outlook for demand. A supply surplus will shrink to 93,000 tons in 2015, from 167,000 tons this year, as gains in manufacturing boost consumption, Barclays Plc analysts said in a report Jan. 13.

The World Bank lifted on Jan. 14 its forecast for 2014 global economic growth to 3.2% from a June projection of 3%.

A measure of speculative positions across 11 agricultural products rose 35%, the most since August, the CFTC data show. Soybean holdings climbed 17%, the largest gain in nine weeks. Investors were less bearish on wheat, trimming their net-short position to 56,482 contracts, from 73,088 a week earlier, which was the biggest bet on a decline since the data begins in 2006.

Cattle Record

Cattle wagers jumped 13% to 118,856 contracts, the highest since October 2010. Futures in Chicago extended a rally to an all-time high on Jan. 16. Prices climbed in the five years through 2013, the longest streak on record. Commercial beef output in the U.S., the biggest producer, may drop 5.4% this year to 24.32 billion pounds (11.03 million tons), the lowest since 1994, the government said Jan. 10.

“As we get an improvement in global economic growth, I think we’ll start to see that in the demand trend, which will ultimately overtake some of the supply-growth prospects,” said Rob Haworth, a Seattle-based senior investment strategist at U.S. Bank Wealth Management, which oversees $113 billion. “Ultimately, we’ll see demand start to overwhelm supply.”

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