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Gold Futures Eases from Record Highs as Hedge Funds Take Profits

Strategic Insights

— 2 min read

Gold futures snapped a six-day winning streak on Thursday, falling from all-time highs as hedge funds took profits from the metal's record prices. Despite the decline, gold prices remained near record levels, supported by ongoing investors' appetite for the precious metal as a refuge investment. Analysts attribute the investor interest to concerns about the global economic recovery and the potential devaluation of the dollar.

Key Takeaways:

  • Gold futures eased from all-time highs on Thursday, snapping a six-day winning streak, as participants sought to cash in on the metal's record prices.
  • The most-actively traded gold contract, for December delivery, settled down 70 cents, or 0.1%, at $1,309.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
  • Hedge funds were cashing in some of their long gold contracts to boost fund performance figures, said George Gero, vice president with Capital Markets Global Futures.
  • Open interest in gold futures hit a record 619,408 contracts on Tuesday, indicating a bigger appetite for contracts from both buyers and sellers.
  • Investor sentiment remains positive toward gold, with a raft of macro uncertainties driving interest, said Suki Cooper, analyst with Barclays Capital.
  • The creation of new money through the Federal Reserve's easing monetary policy measures is expected to pressure the dollar and boost gold as a hedge against the potential devaluation of the greenback.
  • Ultralow interest rates have provided a broad backdrop of support for gold, making noninterest-bearing gold a more attractive investment.
  • Jitters about European sovereign debt problems have also bumped gold higher as a safe-haven investment.

Statistics:

  • Gold futures settled down 70 cents, or 0.1%, at $1,309.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
  • The most-actively traded contract, for December delivery, hit a record intraday price of $1,317.50 on Thursday.
  • Open interest in gold futures hit a record 619,408 contracts on Tuesday.
  • Silver futures for December delivery settled down 0.6%, or 13.1 cents, at $21.821 an ounce.

Sources:

  • "Gold futures ease from all-time highs" by Dow Jones Commodities News via Comtex, September 30, 2010.
  • "Spot Logistics Inc." by Bill O'Neill, Principal, LOGIC Advisors, as cited in Dow Jones Commodities News via Comtex, September 30, 2010.
  • "George Gero, Vice President, Capital Markets Global Futures" by Dow Jones Commodities News via Comtex, September 30, 2010.
  • "Suki Cooper, Analyst, Barclays Capital" by Dow Jones Commodities News via Comtex, September 30, 2010.

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