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Gold Settles Lower: Are Investors Losing Hope for a Rebound?

Meera Shawn - Author
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Nov. 20 2020, Updated 10:52 a.m. ET

Gold settles lower

Gold prices (GC) for COMEX futures August delivery were down by 0.38% after a period that was characterized by rising negative trading sessions. In the near future, experts are predicting a hefty fall in prices. The current price levels are crushing the five-year low price marks. Other precious metals are following a similar momentum. Silver (SC) fell 0.26%. In contrast, platinum (PL) and palladium (PA) rose by 0.56% and 0.80%, respectively, on the last trading day. However, the downward trend continued.

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During the last few trading days, spinning tops indicate indecision among buyers and sellers. They couldn’t push the prices above or below its trading range. The open, close, high, and low prices have little difference. On the last trading day, gold closed at $1,098.2 per ounce. The day before, it closed was $1,101.5 per ounce.

Hedge fund positions

Gold doesn’t seem lucrative for the asset managers anymore. There appears to be little reason to add it to investment portfolios. Hedge funds are opting for a net short position on gold. This is happening after a long time—almost six years.

Hedge funds like Paulson and Einhorn held as much as 6 million shares of the SPDR Gold Trust (GLD) in their basket. There’s a possibility that they’ve cut down on these immense positions. Similarly, other hedge funds have likely trimmed down their gold and related ETF holdings.

GLD fell marginally in yesterday’s trade by 0.86%. It has been the highest invested in and preferred ETF by precious metal investors. Paulson and Einhorn invested in Agnico Eagle Mines (AEM), Randgold Resources (GOLD), and Iamgold (IAG), according to the end in March. These companies’ composition weight, as a percentage of the VanEck Vectors Gold Miners ETF (GDX), is close to 10.76%.

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