Hedge funds are net short on gold for the first time. This means expect gold price to plunge down more. Hedge funds are holding the first ever bet on a decline in gold prices since the U.S. government started collecting the data in 2006.
The funds and other speculators shifted to a net-short position of 11,345 contracts in New York futures and options in the week ended July 21, according to figures from the U.S. Commodity Futures Trading Commission.
No doubt gold recently touched 5 1/2 years low.
Gold slid more than 1 percent on Friday to its lowest since early 2010 as fresh strength in the dollar prompted another wave of selling, putting the metal on course for its biggest weekly loss in nine months.
Prices have been under pressure since tumbling more than 3 percent in Asian trading hours on Monday, their biggest one-day drop in nearly two years, in a selloff accompanied by heavy trading volumes in New York and Shanghai.
The biggest demand for gold is in China and India. With prices falling, gold buyers will hold making the buy decisions in the hope to make a better bargain in the near future. What this means is that the downward pressure on gold prices are going to get strong.
You can read this open letter to those investors who are still bullish on gold!