Gold To Rally Year End As Traders Close Some Of Record Short Positions
GoldCore
GoldSeek.com
Tuesday, 17 December 2013
Gold is marginally lower today after two days of gains as the Fed’s two day policy meeting begins. More positive than expected U.S. data and continuing SPDR outflows may have led to weakness.
Gold’s gains in recent days are likely partly due to a short covering rally. Nervous traders may be closing some of their record short positions ahead of a Federal Reserve policy decision on whether to begin tapering its equity and bond friendly debt monetisation measures.
Most economists believe the Fed will not begin tapering till March of next year, which could be prompt traders to further cover their short positions.
Short positions are at multi year highs and if the Fed does not taper tomorrow we will likely see a large short covering rally going into the New Year as shorts close out positions and balance books at year end.
Bearish bets by hedge funds and money managers in U.S. gold futures and options are close to a 7-1/2 year high, according to data from the Commodity Futures Trading Commission (CFTC).
SPDR Gold Trust, the world’s largest gold ETF, said its holdings fell 8.70 tonnes to 818.90 tonnes on Monday – its biggest outflow since Oct 21.
Holdings are at their lowest since January 2009 after more than 450 tonnes of outflows this year caused by traders and more speculative investors channelling money towards riskier assets such as equities and bonds which are at record highs in many countries.
The Rest…HERE
