NewGold fever fades as funds turn bearish
Money managers see US$4 billion loss from products backed by bullion as the dollar strengthens and valuations for global equities hit records
Judging by the barometer of hedge fund interest, there is less to get excited about in gold these days.
Even as Greece battled with its creditors to avoid default and keep the euro zone intact, speculators retreated from the metal used as a haven from economic and political upheaval. Money managers cut their net-long wagers by the most in 15 weeks, US government data showed.
The strengthening US dollar and record valuations for global equities are diminishing bullion's appeal as a store of wealth.
As the combined market capitalisation of stocks thundered through US$67 trillion last week and the dollar traded at its highest level in at least a decade, this month's losses in exchange-traded products backed by gold reached US$4 billion.
"Longer term, we're still negative on gold," said Jack Ablin, the chief investment officer at BMO Private Bank. "I view it as insurance. If nothing happens, you should expect to lose money on it. Most of the time, nothing happens. As a risk asset, I think equities are more attractive."
The net-long position in gold tumbled 18 per cent to 110,164 futures and options contracts in the week to February 17, according to Commodity Futures Trading Commission data. It was the third consecutive decline, the longest streak since November last year. Short holdings rose 44 per cent, the most since August.