New Delhi, April 22: Last week fold futures prices gained traction after an intense period of liquidation during a period that was highlighted with a terrorist attack in Boston on April 15, 2013. Precious metals have experienced a significant de-leveraging in the past couple of weeks as managed money moved out of hard assets despite continued liquidity provided by many central banks.
Historically, during periods of heighten concerns over a terrorist attack gold and the yen would strengthen as investors moved into perceived safe havens. On this occasion, despite a small rebound in the price of gold from its recent lows, gold futures prices remain under pressure. The decline in gold prices spilled over into the equity markets, which has had one of the worst weeks in 2013.
At the momentum, the dollar seems to be the prettiest dress in a second hand store. Investors have been moving into the dollar and out of other currencies including gold which is seen by many as a currency. Gold interest rates have been moving in favor of the dollar during the past couple of weeks, making it difficult for investors to hold long gold positions.
Managed money continued to exit long positions in gold futures and options according to the most recent Commitment of Traders report released by the CFTC. According to the Commodities Future Trading Commission, portfolio managers continued to exit long position and have been adding to short positions in the week ending 4/16/2013. Long positions still outweigh short positions but that is likely because of the enormous long positions held by exchange traded funds.
