Bullish gold wagers by the most since July and Sold Copper Holdings as Emerging-Market


gsr-214575Hedge funds raised bullish gold wagers by the most since July and sold copper holdings as emerging-market turmoil boosted concern the global economy will slow and increased demand for precious metals as a haven.

The net-long position in gold jumped 40 percent to 60,672 futures and options in the week ended Jan. 28, U.S. Commodity Futures Trading Commission data show. Long wagers rose 5.5 percent to the highest since September, and short bets dropped 16 percent. Net-bullish copper holdings tumbled 62 percent as shortsgained by the most in 11 weeks.

About $1.9 trillion was erased from the value of global equities last month as China’s economy slowed and the Federal Reserve further cut stimulus on Jan. 29. South Africa’s central bank increased interest rates, Turkey more than doubled them and Argentina’s peso dropped 19 percent against the dollar in January, more than any other currency tracked by Bloomberg. The tumult drove gold to its first monthly gain since August and copper to the worst start to a year since 2010.

“China rules the copper market, and it’s obvious that there are no reasons for this market to move higher as supply is ample, and demand is sluggish,” said Peter Jankovskis, who helps oversee $3.5 billion as co-chief investment officer of Lisle, Illinois-based OakBrook Investments LLC. “Gold, on the other hand, is seeing some buying given the turmoil in many countries, but what remains to be seen is if the rally can sustain in the face of tapering.”

Gold Rally

Gold futures gained 3.1 percent last month to $1,239.80 an ounce, while copper dropped 5.9 percent on the Comex in New York. The Standard & Poor’s GSCI Spot Index of 24 commodities fell 1.6 percent. The MSCI All-Country World Index of equities declined 4.1 percent. The Bloomberg Dollar Spot Index, a gauge against 10 major trading partners, rose 1.2 percent. The Bloomberg Treasury Bond Index climbed 1.8 percent.

Net wagers across 18 U.S.-traded commodities rose 6.5 percent to 782,818 contracts last week, the highest since October, the CFTC data showed.

The U.S. Mint sold 91,500 ounces of gold coins last month, the most since April, joining counterparts fromAustralia to Europe in reporting higher demand. Prices rebounded more than 5 percent since reaching a 34-month low in June as physical buying rose. Bullion shipments to China from Hong Kong in 2013 more than doubled to a record 1,108.8 metric tons from a year earlier, according to customs data.

Copper Supplies

Copper stockpiles monitored by the Shanghai Futures Exchange jumped 18 percent last month, the first increase since October. Global production will outstrip use by 167,000 tons this year, following a deficit of 137,000 tons in 2013, Barclays Plc estimates. The London Metal Exchange Index of the six main metals traded on the bourse fell 3.7 percent last month, the worst start to a year since 2010.

The economy in China, the world’s biggest consumer of everything from copper to cotton to pork, will expand 7.4 percent this year, the slowest pace since 1990, a Bloomberg survey showed.

Robust growth in the U.S. will help stem declines for industrial metals, and the rally in gold will be short lived, according to James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $340 billion in assets.

Fed Stimulus

U.S. household purchases, which account for about 70 percent of the economy, climbed more than expected in December, Commerce Department figures showed Jan. 31. The Fed last week cut its monthly bond purchases to $65 billion from $75 billion, a second straight $10 billion cut. Goldman Sachs Group Inc. is forecasting more declines for gold after it fell 28 percent last year. Prices will reach $1,050 in the next 12 months, the bank said in a Jan. 12 report.

Bullion holdings through exchange-traded products fell 33 percent in the past year, erasing about $71 billion from the value of the funds.

“What we are seeing is broadening of economic growth, and and China is not contracting — the growth rate has slowed, but it’s still growing,” Paulsen said. “Industrial metals may slowly see an upturn once the turmoil inemerging markets calms. At that point, there will not be much upside for gold.”

Goldman View

Banks from Goldman to Citigroup say raw materials are heading for more losses in 2014 as rising supplies and slowing demand compound slumps that led to bear markets last year in gold, copper and corn. The super cycle that led commodities to almost quadruple since 2001 is reversing, with prices set to drop 3 percent in 12 months, Jeffrey Currie, Goldman’s head of commodities research, said in the Jan. 12 report. The asset class will be a “wallflower” compared with equities, Citigroup said in a Jan. 6 note.

Bullish bets on crude oil climbed 13 percent to 260,282 contracts, the biggest gain since July, government data show. Prices dropped 0.9 percent in January, the fourth loss in five months. The U.S. is extracting the most oil since 1989 as producers tap shale-rock formations, cutting costs for refiners and driving fuel prices at the pump down 9.7 percent since March.

A measure of speculative positions across 11 farm goods slid 0.3 percent last week, the CFTC data show. The S&P GSCI Agriculture Index of eight components dropped 1.3 percent in January, after a 22 percent decline in 2013 that was the biggest annual slump since 1981.

Wheat Bears

Investors became more bearish on wheat, boosting their net-short position, or bets on a decline, to 62,501 contracts. That compares with 56,571 a week earlier. Global production will reach 707 million tons in the season that ends in 2014, higher than a November forecast of 698 million tons, because of improving harvests from Canada to China, the London-based International Grains Council said Jan. 30.

The net-short coffee position reached 5,454 contracts, compared with 2,755 a week earlier. Arabica-coffee prices surged 9.4 percent last week, entering a bull market on Jan. 31, as dry weather threatened production inBrazil, the world’s top grower and exporter.

“The time when people were buying anything has moved, and now people are taking a view on individual commodities,” said Frances Hudson, a strategist at Standard Life in Edinburgh, which oversees $294 billion. “The super cycle has ended. The story for copper is neutral. The days of seeing high numbers from China may be ending. People saw gold was oversold last year, and money was moving to equities. There has been some reshuffle, but I don’t think there has been a reversal of fortune for gold.”

  • privatlån

    Article writing is also a fun, if you know afterward you can write if not
    it is difficult to write.

  • finanse

    Aw, this was a really good post. Finding the time and actual effort to produce a really good article

  • my link

    How can you consider totally different websites on Blog writer with keyword or research?

  • important site

    How to obtain google google adsense keep track of my all 3 information sites and 2 websites ?

  • What i don’t understood is actually how you are not really much more smartly-appreciated than you may be right now. You’re very intelligent. You realize thus significantly in terms of this topic, made me personally consider it from a lot of numerous angles. Its like men and women don’t seem to be involved except it¡¦s one thing to accomplish with Girl gaga! Your personal stuffs excellent. At all times care for it up!

  • Collaborative Learning

    you’re in point of fact a excellent webmaster. The site loading speed is incredible. It kind of feels that you’re doing any distinctive trick. Also, The contents are masterwork. you’ve done a wonderful job on this topic!

  • Simply want to say your article is as astonishing. The clarity in your post is simply great and i can assume you are an expert on this subject. Well with your permission let me to grab your feed to keep updated with forthcoming post. Thanks a million and please carry on the rewarding work.

  • Hello.This post was really remarkable, particularly since I was searching for thoughts on this subject last Monday.

  • I have been exploring for a little bit for any high-quality articles or blog posts in this sort of space . Exploring in Yahoo I ultimately stumbled upon this web site. Reading this information So i¡¦m glad to exhibit that I have an incredibly excellent uncanny feeling I found out exactly what I needed. I most indisputably will make sure to don¡¦t forget this site and give it a look on a continuing basis.

  • I think other website proprietors should take this web site as an model, very clean and wonderful user genial style and design, as well as the content. You are an expert in this topic!

  • I really like your writing style, great information, appreciate it for posting :D. “I will show you fear in a handful of dust.” by T. S. Eliot.

  • We are a group of volunteers and starting a new scheme in our community. Your site provided us with valuable information to work on. You have done an impressive job and our entire community will be grateful to you.