Funds Are Shorting Gold, Should you?

Gold has opened in green on Wednesday, currently trading at around $1260, up by 0.1%. In addition, the price for Gold has been falling for some time, losing around 9% over the past year. However, many investors, including hedge funds have been shorting gold recently, according to CNBC. Jackie DeAngelis and the Futures Now Traders, Rich Ilczyszyn, and Anthony Grisanti, have looked into this commodity and tried to explain why the funds have been shorting it. The speculators have been shorting Gold, therefore, Gold net longs have declined to the lowest level since January, Jackie DeAngelis stated.

Futures Now Traders have a divided opinion on the Gold Market. From one side, Mr.  Ilczyszyn considers that the Gold is oversold and therefore it might go up. At the same time, the quantitative easing promoted by the European Central Bank, might pick up the gold prices in Euro, which therefore could lead to an increase in the U.S. as well. In this way, a good point for shorting gold would be at around $1300, which means that investors should wait for the price to climb a little bit more.

However, the Mr. Grisanti thinks that the ECB policy is aimed to weaken the Euro, in comparison to a stronger Dollar, therefore, if the Dollar gets stronger, the price for Gold will decline. He is short Gold, having a stop at $1271, with the sell point starting at $1264 and the target being $1242. Mr. Ilczyszyn, however, stated that in his experience, he has seen both the Dollar and the Gold moving up.

Watch the full video below:

Yesterday, Simona Gambarini, the associate director of research at ETF Securities, also has discussed the gold prices in an interview with CNBC. She stated that even though investors are moving from Gold ETFs into more cyclical commodities, Gold still remains a good asset for insurance reasons rather than for gaining profits.

Disclosure: none