• Monday, March 04, 2024
businessday logo

BusinessDay

Gold analysts get most bullish in a year after rout

businessday-icon

Gold analysts are the most bullish in a year on speculation that investors are reducing near-record bearish bets after the biggest plunge in prices since 1981.

Fifteen analysts surveyed by Bloomberg News expect gold to rise this week, two are bearish and four neutral, the highest proportion of bulls since December 2012. Short positions held by hedge funds and other large speculators jumped almost fourfold from October to December 24, as the bear market deepened the latest US Commodity Futures Trading Commission data show.

Prices rebounded as much as 5.4 percent since slumping to a six-month low on December 31.

Gold retreated for the first time in 13 years in 2013, as an improving economy spurred speculation the Federal Reserve would curb stimulus.

More than $73.4 billion was erased from the value of gold-backed funds as some investors lost faith in the metal as a store of value. Bullion rallied as much as 21 percent in two months through August as traders cut short positions and prices that slipped to a 34-month low in June boosted demand for jewellery, coins and bars.

“There is some sense that the market is primed for a short-covering rally,” said Ross Norman, CEO of Sharps Pixley Ltd., a brokerage handling physical bullion in London. “The deeper you push it underwater, the more it’s going to spring back when it does recover. Physical demand at the moment is very robust.”

Bullion rose to near a three-week high of $1,246.46 an ounce in London today, rebounding from last year’s 28 percent slide. The Standard & Poor’s GSCI gauge of 24 commodities fell 2.2 percent in 2013, while the MSCI All-Country World Index of equities gained 20 percent. The Bloomberg US Treasury Bond Index lost 3.4 percent.

Bullion slipped the past four months and reached $1,182.27 on December 31, within 0.1 percent of the June low. It rebounded since then as some investors closed out bearish wagers, and as physical buyers viewed prices near $1,200 as attractive, HSBC Securities (USA) Inc. wrote in a January 2 report.

The US Mint sold 56,000 ounces of American eagle gold coins in December, the most since June and contributing to a 14 percent gain in annual sales, data on its website show. Australia’s Perth Mint sold 41 percent more gold in 2013 and Turkey’s imports climbed 64 percent last month to the highest since July, data on the Istanbul Gold Exchange’s website show.