Categories:
General Market Commentary
/
Precious Metals
Topics:
General Market Commentary
/
General Precious Metals
Gold price surges as hedge funds wager $9bn on more gains
The gold price surged to the highest since January 2013 on Monday as retail investors and hedge funds piled into the safe havens to inoculate against growing panic about the spread of coronavirus infections outside China.
The gold price jumped out of the gate on the Comex market in New York, touching a high of $1,691.70 shortly after the open, up $42.90 an ounce or 2.6% compared to Friday’s close. That was the biggest gain since June 2016, when Brits voted to leave the European Union.
Buying was especially heavy with contracts to deliver gold in April equal to more than 61m ounces traded by mid-afternoon. Gold was back to the low $1,670s later in the day, but bullion remains up more than $140 since the start of 2020.
Net purchases of gold-backed ETFs for more than 22 straight sessions have seen holdings reach record levels above 80m ounces in February. Large-scale investors like hedge funds or so-called ‘managed money’ speculating in gold futures have also built up massive bullish positions.
Ole Hansen, head of commodity strategy at Saxo Bank, says in a research note hedge funds added 24% to net long positioning (bets that gold will be higher in the future) last week.