Speculators are a squeamish bunch. Barring untoward events, we expect weaker prices over the short-term. But this will create opportunity later. The Fed is on the wrong side of its own created mess and at this point can do only more harm. Once the realization of slow growth and higher inflation takes hold, precious metals will again be in demand.
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On Monday gold continued to trade sideways with December futures trading on the Comex market in New York exchanging hands at $1,265.90 an ounce in European trade, down $1.80 from Friday's close.
Gold has been on the defensive since the start of October and is still down nearly $50 after falling to a four month low of $1,243 on October 7.
Year to date the metal is still managing gains of nearly 20% or more than $200 an ounce, one of its best annual performances since 1980.
But there are signs that hedge funds active on the derivatives market have lost confidence in gold's ability to claw back losses suffered since mid-July when the metal touched a two-year high near $1,380 an ounce.
During the previous two weeks speculators dumped more than 10 million ounces, the most rapid reduction since 2006, when government first started to collect the data
Bullish bets placed by hedge or so-called managed money on gold futures and options are down by just over 50% from the July high and below the net position reached in May, when gold came close to falling through the $1,200 an ounce level.
mining.com/gold-price-hedge-funds-abandoning-market-record-pace
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