Hedge funds’ record net-bearish bets on gold signal how quickly investor appetite for the precious metal could turn.
On Friday, bullion futures climbed the most in five months after Federal Reserve Chair Jerome Powell signaled policy makers are sticking to gradual interest rate increases. That gave the precious metals market a needed jolt, days after money managers boosted their net-short position on gold to a record for a fifth straight week.
Gold has tumbled about 11 percent from this year’s high as the dollar strengthened and robust U.S. economic growth bolstered the case for the Fed to keep raising borrowing costs.
Even during recent bouts of market turmoil, investors have bypassed bullion in their hunt for havens, choosing instead the greenback, yen or Treasuries. That downtrend was interrupted as Powell delivered his dovish speech in Jackson Hole, Wyoming.
“Unfortunately for those shorts today, it wasn’t quite the scenario they were hoping for, said Chad Morganlander, a money manager at Stifel Nicolaus & Co., which oversees $270 billion.
For the rest of this article: https://www.bloomberg.com/news/articles/2018-08-24/hedge-funds-kept-betting-against-gold-even-as-prices-began-rally