Hedge funds bearish over tough year for gold bulls

LONDON: Record hedgefund pessimism about gold prices came at exactly the wrong time, just prior to the precious metal's biggest rally since September.

Money managers boosted their gold netshort position to the highest ever three days before Friday’s United States jobs report, which showed growth for payrolls, but also a rising underemployment rate. The data, coupled with Federal Reserve Chair Janet Yellen’s signals that interest rate increases will be slow as the economy grows, sent gold prices higher. It’s been a tough year for gold bulls, with prices already set for a third annual loss, the longest slump since 1998.

Prospects for higher borrowing costs have boosted the dollar and curbed the appeal of the metal as an alternative. Bullion touched a five-year low on December 3, 2015.