Comex Gold Tumbles As Recent Longs Liquidate
(Kitco News) - Goldfutures fell hard Thursday on an apparent exodus by some of the "fast funds"that previously had been buying into the market, traders said.
Asof 10:48 a.m. EDT, Comex August gold was $15 lower to $1,278.20 an ounce. JustTuesday, the contract had hit its highest level since mid-April, peaking at$1,298.80 an ounce, and a break of $1,300 had been seen as imminent.
Acouple of New York-based traders commented that it's hard to tell whether themove was triggered by a single large seller, since trading in futures isprimarily electronic nowadays.
"Itseems to have tumbled because people are liquidating," said a desk trader.
Hecommented that the pullback comes after a "healthy" run-up in gold from a lowbelow $1,220 in early May to nearly $1,300 this week. Now, traders areadjusting positions, he said, particularly with the U.S. dollar having astronger tone.
KevinGrady, president of Phoenix Futures and Options LLC, commented that a lot oftraders had taken out long, or bullish, positions lately on a "fear trade."Three major events are taking place Thursday - a European Central Bank meeting,congressional testimony by former FBI Director James Comey and U.K. elections.
"Alot of people are liquidating some of these positions," Grady said.
Muchof the activity lately has been "fast funds" that tend to get in and out of themarket quickly, he added. He pointed out that the number of open positions has beenchanging by as much as 20,000 to 30,000 contracts per day lately, an unusuallylarge amount.
"Theyget in and they get out. They get in and they get out. It's fast funds that aretrading the market, not longer-term speculators and not like real investors,"Grady said.
Asof when he spoke shortly before 10:30 a.m. EDT, volume in August gold wasalready some 178,000 lots for the day, which he described as high for this timeof day.
By Allen SykoraFor Kitco News
Follow @AllenSykora
asykora@kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities,securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.  |