Financial Times – Commodities prices have been falling across the board as hedge funds cut their exposure to one of the most popular asset classes so far this year, suggesting that recent record prices have been buoyed by speculative flows.
The spread of deleveraging to commodity hedge funds could be good news for central bankers – usually afraid of any financial contagion.
Crude oil prices late last week retreated by 10 per cent from the record high of $111.80 a barrel reached on Monday, while other commodity prices have also fallen sharply.
David Holmes, of Dresdner bank in London, said that hedge funds were getting out of many of their positions. “Clearly, they were betting that prices would rise in commodities and now they are reducing exposure and most likely locking in profits.”
