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Hedge funds return to precious metals amid rising inflation and geopolitical risks

Relevance up to 03:00 2022-04-22 UTC–4

The latest trading data from the Commodity Futures Trading Commission shows that the current geopolitical tensions in Ukraine continue to push hedge funds into the gold market, even as the precious metal faces a growing headwind of monetary tightening around the world.

In the CFTC disaggregated report for the week, money managers on the Comex increased their speculative long positions in gold futures by 16,924 contracts to 165,244. At the same time, short positions also rose, but only by 1,526 contracts, to 48,219.

Gold net length now is 117,025 contracts, which is 15% more than the previous week. The increase ends a five-week decline in bullish rates.

Bullish betting pushed $3 billion into gold last week, analysts say. The precious metal, despite the hawkish tightening of the Fed’s monetary policy, was supported by inflationary risks and sanctions against Russia.

Meanwhile, hedge funds have increased their bullish bets on silver, despite yesterday’s decline in price.

The disaggregated report showed that speculative long positions in Comex silver futures rose by 2,523 contracts to 54,935. At the same time, short positions decreased by 592 contracts to 12,855.

The net length of silver is 42,080 contracts, up almost 8% from the previous week.

Analysts say that, like gold, silver is a safe-haven asset as investors seek to protect themselves from geopolitical uncertainty and rising inflationary pressures.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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