23.11.201423:56:43UTC+00Gold bets increase behind surprise rate cut in China

Hedge funds increased the number of their bullish bets on gold at the fastest rate since June after new measures from the central banks of China, Japan, and Europe stemmed its decline.

In New York, net long positions in options and futures grew by 56%, while shot holdings declined to the lowest in two months alongside the rise of long wagers, based on data from the US government.

Prices of gold hit the highest in three weeks on November 21st after China surprisingly cut its benchmark interest rates for the first time since July 2012. In other economies, both the Bank of Japan and the European Central bank introduced their own stimulus to boost growth in their respective regions. The precious metal reached its lowest since 2010 on November 7th when the US dollar strengthened further behind outlook that the Federal Reserve will begin raising up its rates.

Money manager Dan Denbow from the USAA Precious Metals & Minerals Fund says that, “Stimulus activity from China and Europe more than supports demand for gold. Think of it like a level: gold is the bubble moving back and forth. One day gold is focusing on the U.S. dollar, and that would push the bubble down, but all these stimulus measures come in, and that would push the bubble up.”

Futures of Gold advanced by 1.1% last week to a price per ounce of $1,198.50 in New York’s comex. It was trading 0.3% up at $1,202.40 mid morning Singapore time today, while the Bloomberg Dollar Spot Index increased by 0.7%.