Gold speculators misjudged prices for a second consecutive week as the prospect of less stimulus from the Federal Reserve pushed futures lower.
Money managers raised their net-long position by the most since February in the week ended May 6. The next day, prices fell the most three weeks after Fed Chair Janet Yellen said the U.S. central bank’s four cuts in monthly bond purchases since November were “appropriate” because there is “sufficient underlying strength” in the domestic economy.
In the 14 weeks since January, investors have a track record of 50 percent, betting wrong on gold seven times. Prices that reached a six-month high on March 17 have retreated as much as 8.9 percent. Yellen told Congress on May 7 that while borrowing costs will be close to zero for a “considerable time,” policy makers will continue to reduce the pace of asset purchases in “measured steps.”
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The miners have started 2014 very well indeed on the back of rising gold prices, so the question is; is this the real deal or another head fake? Is the bottom really in? Could there be a final capitulation just ahead of us? Will the summer doldrums take the PMs lower?
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