Hedge
funds accumulated their second-biggest bet against gold on record just as
prices rallied the most in 15 months on surging demand for coins and jewelry
and Goldman Sachs Group Inc. ended a recommendation to sell.
The
funds and other large speculators held 69,726 so-called short contracts on
April 23, within 0.6 percent of the all-time high reached six weeks earlier,
U.S. Commodity Futures Trading Commission data show. The net-long position
dropped 25 percent to 46,168 futures and options. Net-bullish wagers across 18
U.S.-traded raw materials slid 5 percent, the third decline in four weeks, with
cuts in silver, corn and gasoline.
Bullion
rallied 11 percent since reaching a two-year low April 16. The U.S. Mint ran out
of its smallest gold coin last week, with sales across its products poised for
the best month since December 2009, and the U.K. Mint said purchases tripled.
Premiums paid by jewelers in India (XAUINR), the biggest importer, to secure
supply surged as much as fivefold in 10 days. Goldman said April 23 it closed a
bearish recommendation, while saying further declines are likely.
“It’s
bizarre that the price has come back so rapidly,” said Donald Selkin, who helps
manage about $3 billion of assets as the chief market strategist at National
Securities Corp. in New York. “After the big decline, demand jumped like crazy.
It’s the old rubber-band theory: You stretch too far, and eventually, it snaps
back. Banks came in to buy, and there is record demand for coins around the
world.”
(Source: Bloomberg)
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