Hedge funds bullish gold bets surge to 13.8m ounces

Net long positions in gold amassed by large investors jump 12.5% to a more than one-year high

The gold price ended higher Friday after bullish positions held by large investors soared again.

By the close of regular trade on the Comex division of the New York Mercantile Exchange, gold futures for June delivery – the most active contract – rose to $1,335 an ounce but remained sharply off for the week.

On Monday the metal hit a high above $1,380, the best level since June and up 14.8% since the start of the year.

Long positions – bets that the price will go up – held by so-called managed money increased to 151,939 lots in the week to February 18 according to Commodity Futures Trading Commission data released after the close of business on Friday.

At the same time short positions, indicating weaker prices ahead, were cut by 7,563 to just under 13,510, which translates on a net basis hedge funds holding 138,429 lots or 13.8 million ounces, the highest in more than a year.

The 12.5% jump was the sixth week in a row that large investors increased bullish positions and more significantly it showed fresh buying, compared to the increases of previous weeks which were to cover short positions.

In December 2013 longs fell to a paltry 26,774 lots while shorts held by large investors peaked at more than 80,000 lots, the highest since 2007, back when gold changed hands for $700 an ounce.

It's not only gold derivatives that are finding favour from the smart money in 2014.

Investors in gold-backed ETFs are also returning to the market in droves

Investors in gold-backed ETFs are also returning to the market in droves after 2013 saw net redemptions of a staggering 800 tonnes.

Holdings of SPDR Gold Shares (NYSEARCA: GLD) – the world’s largest gold ETF holding more than 40% of the total – on Friday shot up 4.2 tonnes, bringing year to date gains to 18.75 tonnes.

While the additions have been fairly modest it is in sharp contrast to last year when GLD recorded only 17 days of inflows over the course of the 12 months and almost 540 tonnes left the fund.

In the week to 14 March global gold ETF holdings rose 12.3 tonnes the biggest move since November 2012, taking total holdings to 1766.4 tonnes, the highest level since December 27 and more than 30 tonnes above the lows for the year.

Gold bullion holdings in global ETFs hit a record 2,632 tonnes or 93 million ounces in December 2012.

Image of traders at Sao Paulo stock exchange by Rafael Matsunaga

http://www.mining.com/hedge-funds-bullish-gold-bets-surge-to-13-8m-ounces-81404/

Gartman: This could send gold prices soaring

Gold Prices Today Soaring on the "Ukraine Effect"

SPDR GOLD TRUST ETF

NYSE: GLD

Mar 03

Price: 130.29 | Ch: 2.67 (2.0%)

Gold prices today (Monday) hit a four-month high, surging over 2% on fallout from the Ukraine-Russia conflict; silver prices climbed alongside.

The yellow metal lost 28% in 2013, logging its first annual loss in 13 years. Behind the plunge was the U.S. Federal Reserve's decision to scale back its bond-buying program; however, gold has begun to steady since.

Gold has rebounded 13% so far this year, earning bullion the title of the third-biggest gainer in 2014 behind coffee and lean hogs, according to the Standard & Poor's GSCI Spot Index of 24 commodities.

In the week ending Feb. 25, hedge funds and other money managers upped their net-long positions on gold to 113,911 contracts - a 25% increase - marking the highest since December 2012, according to data by the U.S. Commodity Futures Trading Commission.

And today, the precious metal is headed for its biggest daily gain since Jan. 23.

• Gold futures for April delivery rose 2.4% to $1,353.80 an ounce on the COMEX division of the New York Mercantile Exchange.
• Gold prices hit $1,355 an ounce - the highest for a most-active contract since Oct. 30.

Behind today's gains were tensions that heavily mounted over the weekend between Russia and Ukraine. Here's why the conflict is having such a significant impact on gold prices today...

Ukraine Conflict Lifts Gold Prices

On Sunday, Ukrainian Prime Minister Arseniy Yatsenyuk said his country was "on the brink of disaster" after the Russian parliament approved use of military force in the country.

Russian forces are already on Ukrainian soil. This morning, the Ukrainian State Border Service said that "the pressure from the Russian military" has significantly increased and that Russia is massing armored military vehicles on its side of a narrow sea crossing close to eastern Crimea.

In response, the United States and other major nations are considering imposing sanctions, according to Secretary of State John Kerry on Sunday. U.S. President Barack Obama warned Russia not to intervene, stating that the United States stands by Ukraine.

Gold prices are reacting on the news as investors look to gold's staying power in times of economic crisis. Unlike currencies, precious metals supersede country and governmental boundaries.

And currencies are indeed suffering at the hands of the Ukraine-Russia conflict today. Stock futures are looking grim, with the Dow Jones Industrial Average dropping 1.10% (179.81 points) so far on the day, the S&P 500 down 0.72% (13.43 points), and the Nasdaq Composite down 0.88% (38.03 points).

"The uncertainty surrounding Ukraine could push gold prices higher in the next few weeks... although diplomatic and political solutions are going to be sought... a lot will also depend on investor positioning," Societe Generale analyst Robin Bhar said to Reuters.

Gold prices today aren't the only safe-haven investment getting a boost from the conflict. Look at these other noteworthy increases...

http://moneymorning.com/2014/03/03/gold-prices-today-soaring-ukraine-effect/