The SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and other gold exchange traded products are coming off dismal second-quarter performances, but some data points suggest the yellow metal could be primed for better things in the third quarter.
Conversely, the look for gold among professional traders lacks appeal.
“Hedge funds and large-scale speculators active on the derivatives market seemed to have lost confidence in gold’s ability to move higher and last week all but abandoned their bullish positions, cutting longs – bets on a higher gold price – by 82%,” reports Frik Els for Mining.com.
The strengthening U.S. economy is translating to a stronger dollar, which is often a problem for gold. Gold, like other commodities, is denominated in dollars, meaning it has an inverse relationship to the U.S. currency.
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Gold Hurdles Ahead
“According to the CFTC’s weekly Commitment of Traders data up to 26 June released on Friday speculators now have a net long positions of just 4,186 lots or 13 tonnes after adding significantly to short positions – bets that gold could be bought back at a lower price in the future,” reports Mining.com.