Investors Cut Bullish Commodity Bets in ‘Panic’ on Economy, Debt Concerns - Bloomberg

Funds trimmed bets on rising commodity prices for the first time in four weeks amid mounting concern that the global economy is faltering.

Speculators cut their net-long positions in 18 commodities by 3.6 percent to 1.23 million futures and options contracts in the week ended Aug. 2, government data compiled by Bloomberg show. Bullish gold holdings climbed to the highest since at least June 2006 amid surging demand for an investment haven.

Investors dumped equities and most raw materials for the perceived safety of Treasuries, the Swiss franc and gold last week amid escalating debt concerns in the U.S. and Europe. The Standard & Poor’s GSCI Spot Index of 24 raw materials dropped 5.9 percent, the most since May. The MSCI World (MXWO) Index of equities tumbled to a 10-month low.

“People were just selling everything in a panic move,” Michael Pento, an economist at Euro Pacific Capital, said in a telephone interview on Aug. 5. “We are very concerned with what’s going on in the U.S. economy. We expect the market to continue to be bearish until the Federal Reserve comes in with another round of quantitative easing.”

Service industries in the U.S., the largest part of the nation’s economy, expanded at the slowest rate in 17 months in July, a report showed. European services and manufacturing growth eased to the slowest pace in almost two years.
Commodity Funds

Investors put $2.6 billion into commodity funds in the week ended Aug. 2, according to EPFR Global, a Cambridge, Massachusetts-based research company. Almost all the money went into gold, and industrial-commodity funds had an outflow of $260 million, the firm said. Read More