Hedge funds cut bullish gold bets before prices sink

[NEW YORK] Hedge funds got less bullish on gold before prices dropped to the lowest level since 2010, leaving the metal poised for the worst annual loss in 32 years as investors dump bullion at a record pace.

Money managers reduced their net-long position by 2.8 per cent to 32,524 futures and options in the week ended Dec 17, US Commodity Futures Trading Commission (CFTC) data shows. Short holdings climbed 1.2 per cent to 75,199, within 6 per cent of the record reached in July. Net-bullish holdings across 18 US-traded commodities rose 8.5 per cent to a seven-week high, led by soybeans, natural gas and cotton.

Investors pulled US$38.8 billion from gold funds this year, the most in data going back through 2000, according to EPFR Global, a research company. Futures settled at a three-year low last Thursday in New York, a day after the Federal Reserve cut the pace of its monthly bond purchases. Prices plunged 37 per cent since reaching a record in September 2011, US equities climbed to an all-time high and the dollar is poised for its strongest annual performance since 2008.