uploads///SPDR Gold Shares GLD Fund Flow

Hedge Funds Curb Holdings in ETFs Based on Precious Metals


Nov. 25 2015, Updated 1:56 p.m. ET

Retreating precious metals

Gold’s month-long slide due to the raised expectations of a liftoff caused a curb in the long bets on gold by money managers. However, gold’s price rose on Thursday, November 19, after the Fed’s meeting minutes were released on Wednesday, giving an outlook for a staggered and slow rate hike. November 20 saw precious metals retreat as gold, silver, and platinum fell 0.17%, 0.89%, and 0.26%, respectively. Palladium recovered from its previous losses, gaining a whopping 3.3% on November 20. The prices of precious metals seem to be trapped in a rout.

ETFs like the iShares Silver Trust (SLV) and the SPDR Gold Trust (GLD) fell 0.88% and 0.45%, respectively, on November 20. The bears are active in the current markets after gold fell to multi-year lows. The fund flow in the exchange-traded products has also seen a downfall as the graph above shows.

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ETF wagers

According to data released by the US Commodity Futures Trading Commission, the net-short position in gold futures and options was 8,989 contracts during the seven days ended November 17. Investors are trimming their extensive holdings in gold to the lowest level seen since December 2008. However, the billionaire hedge fund manager John Paulson kept his firm’s holdings in the SPDR Gold Trust in the third quarter.

Mining equities

Mining companies saw their prices fall on Friday as the precious metals once again fell after their gains on November 19. Stocks like Pan American Silver (PAAS), Barrick Gold (ABX), and Hecla Mining (HL) fell 3.9%, 4.6%, and 5.6%, respectively. These three companies together constitute 9.7% of the price changes in the VanEck Vectors Gold Miners ETF (GDX). The GDX indicator itself witnessed a 4.1% fall in its price on Friday, November 20.


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