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Hedge funds have increased bets against major gold miners, documents reviewed by Reuters showed, as COVID-19 vaccines lowered expectations for the yellow metal after a year of record gains.
FILE PHOTO: Employee takes granules of 99.99% pure gold at the Krastsvetmet non-ferrous metal plant, one of the world’s largest producers of the precious metals industry, in the Siberian city of Krasnoyarsk, Russia November 22, 2018. Photo taken November 22, 2018. REUTERS / Ilya Naymushin
TORONTO: Hedge funds increased bets against major gold miners, documents reviewed by Reuters showed, as COVID-19 vaccines lowered expectations for the yellow metal after a year of record gains.
Gold prices have fallen from last year’s highs above US $ 2,000 an ounce as vaccines rolled out against coronavirus encourage investment in assets that perform well during times of economic growth .
“While we are by no means out of the woods in our opinion, the light at the end of the tunnel means that gold markets should start to see an unwinding of trends that have become quite exaggerated during 2020,” Royal said. Bank of Canada analysts said last month.
The bank lowered its forecast for gold for 2021 to US $ 1,810 an ounce from US $ 1,893.
Short trades as a percentage of total Barrick Gold trading volume fell to 24.8% for the second half of last month, from about 14.9% for the first half of December, according to documents reviewed by Reuters.
Newmont Corp saw an increase of 11.4%, from 8.8%, in the same period, while transactions on Kinross Gold rose to 20.6%, from 18.2%, according to the data.
Hedge funds typically engage in the practice of short selling by borrowing a stock from an institutional investor, such as a pension fund, and selling it for a lower price when stocks fall, pocketing the difference.
Tighter lockdown restrictions to tackle a new variant of the virus and massive government debt could nevertheless propel gold higher.
Short bets against Yamana Gold miners fell to 17.7 percent from 25.7 percent, while the number for Alamos Gold fell to 19.5 percent from 21.9 percent.
Spot gold hit its highest level in two months on Monday.
“History has always told us to own gold when central banks are out of control,” said Joseph Boskovich Sr., president and chief investment officer at Old West Investment Management in Los Angeles.
(Reporting by Jeff Lewis and Maiya Keidan; Editing by Dan Grebler)
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