Gold Prices Volatile as Hedge Funds, Banks, Billionaires Play Tug-of-War

June 6, 2012 8:12 AM EDT
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The price of gold is getting increasingly volatile. Last Friday it moved $90 from a low near $1543/oz to close near $1620/oz. More volatility is expected as market players reposition for possible QE in the US and headlines out of Europe.

Since August, hedge funds and other speculators have reduced their net-long position in gold futures by 70 percent, according to CFTC data, noted by Bloomberg. Meanwhile, Soros Fund Management added to its gold ETF holdings in the first quarter, taking his total holdings up to $48.5 million. In the first quarter, Paulson & Co. left their $2.62 billion let long position in gold unchanged. BofA, Goldman Sachs, Morgan Stanley, and Barclays all have price targets on gold that are well north of the current spot price of $1635/oz, with BofA predicting $2000/oz.

SPDR Gold Shares (NYSE: GLD), the popular gold ETF, is expected to open higher on Wednesday morning as the spot price of gold levels off at $1633 in Europe. More volatility is expected after Federal Reserve Chairman Ben Bernanke’s testimony before congress on Thursday.

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Ben S. Bernanke, Morgan Stanley, Bank of America, Paulson & Co. (PCI), Soros Fund Management, Barclays, Hedge Funds

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