(Kitco News) – Hedge funds increased their bearish bets on the gold market as the price failed to break above $ 1,800 an ounce, frustrating many investors.
Analysts noted that interest in gold has suffered since the start of the year, with investors seeing significant momentum in other commodities. In particular, the speculative momentum in copper and palladium pushed prices to new all-time highs above $ 4.50 per pound and $ 3,000 per ounce, respectively.
Many analysts have said that if gold remains an attractive long-term asset against rising inflation, speculative capital will go where the momentum is.
“Gold is experiencing a lot of competition, but now is not the time to throw in the towel for gold,” said Bob Haberkorn, senior commodities broker at RJO Futures, in a recent interview with Kitco News . “Gold is struggling now, but at some point it will have its day in the sun. ”
The CFTC’s disaggregated trader commitments report for the week ending April 27 showed that fund managers increased their gross speculative long positions on Comex gold futures from just 301 contracts to 117,144. at the same time, short positions increased from 6,074 contracts to 66,493.
Gold’s net length currently stands at 50,651, down 10% from the previous week. During the IP, gold prices again tested resistance just below $ 1,800 before coming under selling pressure.
Despite growing disappointment in the gold market, many analysts believe a breakout of $ 1,800 is inevitable as inflationary pressure continues to rise, keeping real interest rates at historically low levels.
As institutional exits continue to weigh on the gold, as nominal rates increasingly ignore the impact of singular reflation, the Fed’s commitment to ‘medium inflation targeting’ could argue for a period of time in which the policy remains at zero but inflation exceeds. This argues for a more favorable environment for investment flows on the horizon, ”TD Securities analysts said.
While hedge funds are not happy with the price action in the gold market, they are increasing their bullish bets on silver.
The disaggregated report showed that gross speculative cash-managed long positions on Comex silver futures contracts increased by 2,790 contracts to 64,769. At the same time, short positions increased by only 221 contracts. at 28,213.
Silver’s net term currently stands at 36,556 contracts, up 7.5% from the previous week. Net silver length is currently at its highest level since late February.
During the IP, silver prices managed to maintain critical support above $ 26. Silver continues to outperform gold as the gold-to-silver ratio holds near a one-month low, last trade at 66.68 points.
Ole Hansen, head of commodities strategy at Saxo Bank, said silver prices were skyrocketing as improving global economic conditions continued to support industrial demand for precious metals.
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