Gold & Silver Beat Stocks, Best First-Half Since 2011 After "Surge in Bullish Hedge Fund Bets"
Monday, 6/30/2014 12:39
GOLD and SILVER prices slipped in quiet trade Monday morning but headed for their strongest first-half gains since 2011 as world stock markets also held flat and commodities drifted.
Gold and silver dipped 0.3% and 0.8% respectively from Friday's 11- and 14-week closing highs.
US stocks were set to slip at the open, but after recording a new closing high last Thursday the S&P500 index was on track for 6.2% half-year gains.
Gold prices stood 9.3% higher from New Year's Eve, silver up 7.0%.
European crude oil contracts meantime slipped 0.6% on Monday after their largest 1-month rise since August, holding Brent crude above $112 per barrel as militant Sunni militia ISIS changed its name solely to "Islamic State" and declared a "caliphate" across its captured territory in Iraq and Syria.
New Eurozone data meantime showed consumer-price inflation stayed at 0.5% annually in May, well below the 18-nation central banks' target of 2.0%.
With US Federal Reserve chiefs now forecasting "long run" interest rates at 3.75%, Bank of England policymaker Charles Bean said this weekend that UK rates may rise back to 5% – long considered the 'normal' or 'neutral' level – only "in the very long term", and probably not before 2024.
"Geopolitical tensions are keeping the
gold price well supported with silver following suit," reckons Commerzbank's commodity team in Frankfurt, Germany.
"Today is the last day of the month/quarter," says a London brokerage, "and as such may see some book squaring, but on the whole, little in the way of fresh moves."
"We are expecting another range bound session for gold," agreed a Singapore dealing desk earlier.
Prices on the Shanghai Gold Exchange ended Monday 3.6% higher from the start of June against the Yuan, but returned to a discount below London quotes in a low-volume session.
Hedge funds trading US futures and options in contrast "saw a surge in bullish bets in both gold and silver last week," notes one US brokerage, reviewing latest data on trader positioning from US regulators the CFTC, released after Friday's close.
Net short of 360 tonnes-worth of silver contracts at the start of June – their first such "net short" position since 2003 – speculative traders in US Comex futures and options last week grew their
bullish betting on silver at the fastest pace since at least 1986, up by over $2 billion.
As a group, speculative traders last Tuesday held a net long position equal to 4,790 tonnes of silver according to CFTC data – the largest net spec long since February 2013.
Betting on higher gold prices also jumped last week, swelling nearly $7.3bn by notional value to a 15-week high equivalent to 454 tonnes.
Gold bullion held to back shares in the largest gold ETF, the SPDR Gold Trust (NYSEARCA:GLD), were unchanged last week at 785 tonnes.
Silver bullion held to back the value of shares in the largest silver ETF, the iShares Silver Trust (NYSEARCA:SLV), last week shrank 0.8% to 10,106.68 tonnes.
"Silver prices trended upwards last week," writes Jonathan Butler at Japanese conglomerate Mitsubishi, "continuing the reversal seen since late May."
Viewed now from a chart analyst's "technical perspective," he says, "silver is overbought for the first time since the second half of February.
"Last time round this was followed by silver losing 15% over the subsequent three months."
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