CHART: Hedge funds won't put money on 2015 gold slide

Compared to December 2013, bullish bets by large speculators in gold futures are three times higher going into 2015

CHART: Hedge funds won't put money on 2015 gold slide

 
Short positions – bets that price would decline – held by hedge funds and other large investors in gold increased to 75,199 lots in the week to December 17, 2013.

That figure was within shouting distance of the more than 7-year high above 80,000 lots or more than 8 million ounces reached the week before according to Commodity Futures Trading Commission data.

Those bearish bets turned out to have been misplaced. After closing 2013 at $1,205 the price of gold jumped out of the starting gate, rising consistently to reach a high of $1,380 in March.

The gold price is now back to where it started, but large-scale speculators in gold futures or "managed money" in CFTC parlance are not gearing up for a fall going into 2014 like they did a year ago as this chart by Ole Hansen, chief commodity strategist at Denmark's Saxo Bank shows.

"This time around the bearish exposure is currently only 3.8 million ounces and if we add the gross longs we find that the net position in the market is currently 10.5 million ounces long.

"Bullish bets in other words are three times greater than at this time last year which indicates a certain hesitancy in throwing the kitchen sink after a potential bearish conviction."

 

CHART: Hedge funds won't put money on 2015 gold slide

Source: Saxo Bank, Bloomberg, CFTC

Image by Anthony Catalano