Reply #97: Gold Tumbles Most in Three Months in New York as Speculators Shed Holdings [View All]

[54anickel]

http://www.bloomberg.com/news/markets/commodities.html

Oct. 19 (Bloomberg) -- Gold in New York fell the most in more than three months on speculation that hedge funds are reducing their holdings of the precious metal, halting a rally since mid- July that sent prices to a 17-year high.

Gold had risen as much as 14 percent since July 19 as speculators and investors bought gold as a hedge against inflation. Speculative long positions, or bets prices will rise, exceeded short positions by 177,410 contracts in New York on Oct. 11, the U.S. Commodity Futures Trading Commission said Oct. 14. The net- long position was the biggest since at least 1983.

``Open-interest has been sky high,'' said Michael Guido, director of hedge-fund marketing and commodity strategy for Societe Generale SA in New York. ``Record long positions were bound to have a little liquidation.''

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``There are some who feel that inflation is a temporary spike that we saw'' in the aftermath of Hurricanes Katrina and Rita, said Frank Lesh, a trader and analyst at Rand Financial Services Inc. in Chicago. ``Now that energy's come off, gold really doesn't like that.'' :eyes:

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A drop in prices may attract physical buyers, traders said. Jewelers bought a record $38 billion of gold in the 12 months ended in June as the global economy grew, the producer-funded World Gold Council said Sept. 7.

``There'll be physical demand probably around $462,'' Guido said.