Gold traded near a five-year low as speculators were net-short the metal for the first time ever.
Bullion for immediate delivery slipped 0.4 percent to $1,094.92 an ounce at 2:35 p.m. in New York, according to Bloomberg generic pricing. The shift in New York gold futures and options came as speculators increased their bearish wagers to the highest since the U.S. government data begins in 2006.
Prices sank 3.1 percent last week, the most since March, on mounting speculation that U.S. interest rates will climb this year, curbing the metal’s appeal because it doesn’t pay interest like competing assets. Citigroup Inc. lowered its three-month forecast on Monday, while Macquarie Group Ltd. on Friday said gold has lost its appeal as a commodity and as an alternative to currencies. The Bloomberg Dollar Spot Index rose for five straight weeks.
“At the moment people see no reason to own gold, and we can see investors dumping gold in a hurry,” Lance Roberts, who helps oversee $620 million as chief strategist for STA Wealth Management in Houston, said in a telephone interview. “The dollar’s strength continues to be the big enemy.”
Spot gold touched $1,077.40 on Friday, the lowest since 2010. Speculators held a net-short position of 11,345 contracts in the week ended July 21, according to U.S. Commodity Futures Trading Commission data.
“The high degree of pessimism shown by speculative financial investors will probably preclude any significant recovery of gold and silver prices in the short term,” analysts at Commerzbank AG, including Eugen Weinberg, said in a note.
Investors cut holdings in gold exchange-traded products last week. The assets fell 1.3 percent, the most since March, according to data compiled by Bloomberg.
China’s net gold imports from Hong Kong slumped to the lowest in almost a year in a sign that demand in the world’s biggest consumer may be slowing.
In New York, gold futures for December delivery rose 1 percent to $1,096.90. Trading was 58 percent above the 100-day average for the time of day.
Silver futures for September delivery added 0.8 percent to $14.605 an ounce on the Comex. On the New York Mercantile Exchange, platinum futures for October delivery gained 0.8 percent to $988.90 an ounce. Palladium futures for October delivery fell 1.5 percent to $613.10 an ounce, the biggest drop since July 17.