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Hedge Funds Trim Gold Bets on Stimulus Speculation

(Bloomberg) Hedge funds cut bullish gold bets by the most since June amid speculation about whether the Federal Reserve will begin trimming its monthly bond purchases.

Money managers cut their net-long position by 27 percent to 48,103 futures and options by Aug. 6, U.S. Commodity Futures Trading Commission data show. Holdings of short contracts rose 26 percent. Net-bullish bets across 18 U.S.-traded raw materials dropped 19 percent to the lowest since March and a measure of wagers across agricultural commodities turned negative for the first time on record.

Gold fell into a bear market in April as some investors lost faith in the metal as a store of value and inflation failed to accelerate amid unprecedented money printing by central banks. Charles Evans, Sandra Pianalto and Richard Fisher, regional Fed presidents in Chicago, Cleveland and Dallas, said last week that policy makers may be closer to tapering debt buying as the labor market recovers. U.S. jobless claims fell in the four weeks ended Aug. 3 to the lowest since November 2007.

“We expect the global inflationary environment to remain subdued, so we would not rush into buying gold,” said Jim Russell, a Cincinnati-based senior equity strategist who helps oversee about $110 billion of assets at U.S. Bank’s wealth management group. “Inflation has not played out as anticipated, and we don’t think it’s going to.”

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