From Precy Dumlao, Opalesque Asia Ė Hedge funds are apparently dumping their gold holdings by the most since February; the latest data from the U.S. Commodity Futures Trading Commission (CFTC) showed that net-long position to the yellow metal slid by 29% to 38,951 futures as at June 18, it was reported.
According to Bloomberg, gold investors reacted negatively to reports that the Federal Reserve would reduce its stimulus spending. Hedge funds were also hurting from the drop in the value of exchange-traded products that saw $54bn wiped off from the industry.
Senior equity strategist Jim Russel of the U.S. Bank Wealth Management told Bloomberg, "Thereís certainly a rush to the exits in gold. The nudge up in the Fedís expectations economically suggests they may unwind their program a little quicker than investors thought."
Last week, Fed Chairman Ben Bernanke announced that the Barack administration would reduce its bond-buying program on signs of continued recovery of the U.S. economy. In reaction, gold prices dived to their lowest since 2010. Credit Suisse Group AG and Societe Generale SA both agreed that the yellow metal would see more price corrections in the coming months.
Gold futures fell 6.9% last week, the biggest drop since April and closed at $1,289.60 an ounce. Prices reached $1,268.70 on June 21, the lowest since Sept.......................
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