Gold Silver Reports — Hedge Funds Exiting Gold — Gold investors seem to agree: Don’t fight the Federal Reserve.
With the Fed’s next policy meeting looming this week, hedge funds are exiting from gold. Speculators cut their bets on a bullion rally by the most in more than three months.Holdings in global exchange-traded funds backed by the metal are down from a three-year high in August.Aggregate open interest in New York futures is mired in the longest slump since May .
Speculation is mounting that Fed officials, in a statement scheduled for release on September 21, will signal that higher US interest rates are on the way . That’s bad news for gold, which thrives as an alternative asset. Through Friday, the metal had surged 24% for the year as policy makers declined to raise borrowing costs.
The Fed is “going to have to eventually raise rates and acknowledge that inflationary pressures have been rising,“ Quincy Krosby, a market strategist at Prudential Financial, which oversees about $1.3 trillion, said. “Certainly , you want to take some profit“ from gold investments before that happens, she said.
The net-long position in gold futures and options fell 11% to 248,858 contracts for the week ended September 13, the biggest decline since the week ended May 24, according to Commodity Futures Trading Commission data re leased three days later. A week earlier, the holdings were 278,994, the highest since July 5.
Futures traded in New York fell 1.8% last week to $1,310.20 an ounce and traded at $1,317.20 on Monday .Gold surged 25% in the first half of the year as economic woes in Europe and Asia sparked optimism that the Fed would be slow to raise US interest rates amid global uncertainty . Since then, an improving US economy has put the brakes on the metal’s momentum. Cost of living in the US rose more than projected in August. — Neal Bhai Reports