Gold News: Hedge Funds Returns to Betting on Gold For Now

Gold News

In the latest gold news: As of April 02 at approximately 2:33pm EST, gold was trading at $1343.11 per ounce, down slightly since last week. At approximately this time last week, gold was trading at $1353.55 per ounce.

gold news

Despite a slight drop from last week, gold remains at a strong price point this week and we observe a general market revival of interest in the precious metal. In a turnaround moment, hedge funds have started to switch the default behavior to sell that has defined the previous four weeks, and are now returning to the gold market, pushing prices to a 5.5-week high, according to trade data from the Commodity Futures Trading Commission. Recent reports have shown that money managers have increased their speculative gross long positions in Comex gold futures by 34,928 contracts to 183,080. Furthermore, we also saw a decrease in the number of short bets, falling 15,428 contracts to 20,917. Overall, we also saw that gold’s net length increased to 162,163 contracts. What does this mean? The data is essentially showing that the gold market has had its most significant shift in bullish sentiment in nearly two years–after all, the net length has jumped 45% from the previous week.

As discussed in previous articles, the reason behind this spike is a conjunction of events that happened to line up perfectly such to increase gold’s prices significantly. According to market analysts, it was an impressive combination of events: the Federal Reserve gave a tempered signal on interest rates, signaling no hurry on increase; geopolitical concerns caused investors to run towards safer investments such as gold; and finally, the growing threat of a trade war between US and China has made investors very wary. George Gero, managing director with RBC Wealth Management, stated, “Attention is back on gold as investors are shunning bonds and equities […] the gold market has solid geopolitical underpinnings”. He also expects that hedge funds will continue to buy gold, and that weeks of lower prices, coupled with falling open interest represents a prime timing opportunity for investors. Furthermore, the market is pushed by sentiment falling in the manufacturing sector in March, according to ISM data, which shows that the manufacturing index is down from 60.8% to 59.3% for March as compared to February.

This sentiment has caused the bullion to remain fairly volatile for the year. In the 14-day gold prediction ending January 02, I Know First’s algorithm based on a stock prediction algorithm showed an impressive 100% accuracy rate, as seen in “Gold Forecast Based on Algorithmic Trading: Returns up to 4.53% in 14 Days.” After a fortnight, I Know First’s average percent change came out to 4.53% with GLD as the top earner, bringing in an impressive 4.53% return to investors.

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