Hedge funds, gold bets reach six-month high

Hedge funds and other speculators raised bets on higher gold prices to the most in six months as signs of slowing United States growth drove bullion above $1,400 an ounce for the first time since June.

The net-long position increased 29 per cent to 73,216 futures and options by August 20, US Commodity Futures Trading Commission data show.

Bloomberg News reports that short contracts fell for a second week and to the lowest since Feb. 12. Net-bullish holdings across 18 US-traded commodities jumped by 34 per cent, the most since July 2010, as wagers on copper and soybeans more than doubled.

Gold, down 27 per cent from its record high, has rallied 18 per cent from a 34-month low in June. Asian demand for jewelry surged as prices tumbled into a bear market.

Sales of new homes in the US declined more than 13 per cent in July and consumer confidence fell in the week ended August 18, increasing speculation the Federal Reserve will look for more signs of growth before easing stimulus that debases the dollar.

“Physical demand is very strong, and that is lending support to prices, and we think it’s time to increase our holdings,” said Michael Mullaney, the Boston-based chief investment officer for Fiduciary Trust Co., which manages about $10bn of assets.

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