Gold bulls hit the exits on strong dollar

HEDGE FUNDS, LARGE SPECULATORS PARE BETS TO LOWEST IN OVER TWO YEARS

The strong dollar is proving too much of a headwind for gold. Hedge funds and other large speculators pared bullish bets on bullion to the lowest in more than two years as the metal fell below $1,300 (Dh4,771) an ounce for the first time this year, spurring the biggest weekly price decline since December.

Money managers headed for the exits as the dollar advanced to a 2018 high amid expectations the Federal Reserve will raise interest rates again next month, helping push up yields on US. Treasuries and hurting the appeal of non-interest-bearing assets like bullion. Mounting geopolitical risks, including a simmering trade spate between Washington and Beijing and resurfacing US-North Korea tensions, failed to revive demand for the metal as a haven

“You don’t have a crescendo of fear building up,” said Walter “Bucky” Hellwig, who helps manage $17 billion (Dh62.3 billion) as senior vice president at BB&T Wealth Management in Birmingham, Alabama. “The risks are still there. Is that pulling a lot of money into the gold market? No, because of the stronger dollar and rising interest rates here in the US.”

Net-long position

In the week ended May 15, money managers reduced their net-long position, or the difference between bets on a price increase and wagers on a decline, by 40 per cent to the smallest since July, according to US Commodity Futures Trading Commission data released three days later. They pared their long position by 9.2 per cent to 107,133 futures and options contracts, the lowest since February 2016.

Gold futures for June delivery fell 2.2 per cent to end the week at $1,291.30 an ounce on the Comex in New York. That sets the metal on course for its first back-toback monthly decline since October.