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Last time hedge funds were this bearish gold price was $600

Image: Generation Grundeinkommen 2013

On Monday, gold went nowhere in New York with August deliveries priced at $1,155.30 an ounce in quiet afternoon trade, down a couple of dollars rom Friday’s close.

Gold is down nearly 12% from its 2015 highs and the pervading negative sentiment – despite all the factors working in the precious metal’s favour – is nowhere more evident than in the positioning of speculators on the futures market.

Last week large gold futures investors such as hedge funds, referred to as “managed money”, slashed overall bullish positions by a whopping 64%. The week before speculators cut long positions by more than half.

Bets that prices will rise only amounted to just 7,574 lots or 757,400 ounces in the week to July 7 according to the Commodity Futures Trading Commission’s weekly Commitment of Traders data.

The net long positioning is now the lowest since at least 2006 when gold was worth less than $600 an ounce.

Speculators’ short positions – bets that gold could be bought cheaper in the future – jumped to more than 10.8 million ounces (306 tonnes), a new record high for bearish bets placed on the New York gold futures market.

Image: Generation Grundeinkommen 2013