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Gold Analysts Most Bearish Since June on Stimulus: Commodities

August 9, 2013
gold coins
The metal is heading for its worst year in three decades, spurring losses for mining companies from AngloGold Ashanti Ltd. to Barrick Gold Corp., as investors lost faith in bullion as a store of wealth.  

(To get alerts for Commodities columns: SALT CMMKT. For more on the gold bear market, see EXT5.)

 

Aug. 9 (Bloomberg) -- Gold traders are the most bearish in seven weeks as investors weigh when the Federal Reserve will reduce bond purchases and holdings of the metal in exchange- traded products dropped to a three-year low.

Fourteen analysts surveyed by Bloomberg expect prices to fall next week, nine were bullish and seven neutral, the largest proportion of bears since the week ended June 21. Investors reduced holdings in gold ETPs by the most in a month on Aug. 7, data compiled by Bloomberg show. Speculators’ holdings of short contracts, or bets on lower prices, rose the most since mid-June last week, according to government data.

The metal is heading for its worst year in three decades, spurring losses for mining companies from AngloGold Ashanti Ltd. to Barrick Gold Corp., as investors lost faith in bullion as a store of wealth. Gold jumped 70 percent from December 2008 through June 2011 as the Fed bought more than $2 trillion of debt in a process known as quantitative easing. Three regional Fed presidents said this week less stimulus may be warranted.

"It’s now more a question of when, not if, on tapering, which can’t be good for gold," said Matthew Turner, an analyst at Macquarie Group Ltd. in London. "Gold has to get over QE and move on."

 

S&P GSCI

 

Gold fell 22 percent this year to $1,309.31 an ounce in London, heading for the biggest annual loss since 1981. The Standard & Poor’s GSCI gauge of 24 commodities lost 2.4 percent since the start of January and the MSCI All-Country World Index of equities gained 11 percent. The Bloomberg U.S. Treasury Bond Index fell 2.5 percent.

Charles Evans, Sandra Pianalto and Richard Fisher, regional Fed presidents in Chicago, Cleveland and Dallas, said this week that the central bank may be closer to tapering bond buying as the U.S. jobs market recovers. Evans is a voting member of the Federal Open Market Committee, while Fisher and Pianalto don’t vote on monetary policy. Jobless claims in the U.S. fell in the four weeks ended Aug. 3 to the lowest since November 2007, the Labor Department said yesterday.

Gold held in ETPs dropped to 1,946.92 tons yesterday, the lowest since May 2010, data compiled by Bloomberg show. The combined value of the holdings is now $81.9 billion, compared with $141.8 billion at the end of 2012. Almost $31 billion was pulled from ETPs backed by gold this year, according to BlackRock Inc. Investments in the SPDR Gold Trust, the biggest fund backed by bullion, are the lowest since 2009.

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