Gold price slides to 7-week low as hedge funds drop 1.8m ounces

Softness in the price of gold continued on Monday bringing the retreat in the metal from its 2014 highs to more than $90 an ounce as speculators cut bullish positions and gold-backed ETF investors scale back holdings.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery in late afternoon dealings traded at $1,284.50 an ounce, down nearly $10 or 0.8% from Friday's close and at the day's low.

The yellow metal has taken a hammering over the past two weeks of trading – gold is down from a 2014 high above $1,380 reached a fortnight ago to levels last seen February 11.

Gold is still up 7% since the start of the year, but the positive momentum seems to be grinding to a halt.

Speculators in gold futures and options reversed course last week with large investors cutting back on long positions – bets that the price will go up – in the week to March 25 according to the Commodity Futures Trading Commission.

On a net basis hedge funds now hold 120,042 lots or 12 million ounces in net longs. That compares to 13.8 million ounces the previous week which was the most bullish positioning taken in more than a year.

Last week also saw a second week of reductions of holdings in exchange traded funds backed by physical gold.

Latest data show in the week to 28 March global gold ETF holdings declined by 0.4 tonnes taking total bullion allocated to investors down to 1,765.8 tonnes.

Bullion held in gold ETFs are still on track for a net gain of more than 30 tonnes during the first quarter, however.

Gold bullion holdings in global ETFs hit a record 2,632 tonnes or 93 million ounces in December 2012, but last year saw net redemptions of 800 tonnes.