Adam Sarhan Reuters Quote: Hedge fund commods bets up in banner week for gas, gold

Reuters

By Barani Krishnan

NEW YORK | Fri Oct 5, 2012 5:53pm EDT

(Reuters) – The net long money held by hedge funds and other big speculators in U.S. commodity markets rose in the week to Tuesday after strong buying in gold and natural gas, trade data showed on Friday.

The rise – calculated from data issued by the Commodity Futures Trading Commission (CFTC) – confounded some analysts who expected a decline in the bullish money held by the so-called “money managers” in commodities after a selloff in other key markets like crude oil, soybeans and corn.

“It’s been a banner week for natural gas, and to an extent, gold, as big investors and institutions aggressively accumulate positions in the two,” said Adam Sarhan at New York-based Sarhan Capital.

Reuters’ calculations of the CFTC’s Commitment of Traders data showed the value of the net long position held by money managers in some 22 U.S. commodity markets tracked by the CFTC rose by just over $600 million in the week to October 2, touching nearly $113 billion.

The figures are calculated by Reuters based on the change in net positions from the week before, multiplied by the contract’s value at the end of the period. Because most investors trade commodities on margin, the change in the value of positions is not directly equivalent to total investment.

In contract terms, the week to October 2 saw a net addition of 30,389 contracts – up 2 percent from the week to Sept 25.

For natural gas alone, there was a buildup of nearly 9 percent in net long positions traded on the New York Mercantile Exchange. Gas contracts on ICE Futures saw a separate 5.3 percent build in net longs.

Natural gas’ front-month futures contract on NYMEX gained nearly 20 percent in the five sessions to October 2, touching a 2012 high of $3.546 per million British thermal units at one stage.

Year-to-date, natural gas is up 13 percent, heading for its biggest gain in five years and ending, at least from a technical viewpoint, a bear market that began in 2008. Still, record-high stockpiles of gas and production at or near an all-time peak have most fundamental traders skeptical of the upside.

Net long positions in gold on New York’s COMEX rose 3 percent in the week to October 2 to stand at 195,647 contracts.

The spot price of gold, which tracks trades in bullion, hit an 11-month high above $1,795 an ounce on Friday, just shy of the $1,800 target eyed by market bulls.

Since an April low of $1,527, spot gold has risen 14 percent. Much of the buildup has occurred since July as speculators piled into the precious metal in anticipation of currency debasement from stimulus measures rolled out by central banks in the United States, Europe and China.

(Editing by Jim Marshall

URL: http://www.reuters.com/article/2012/10/05/us-hedgefunds-commodities-weekly-idUSBRE8941GR20121005

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