FBS Markets : Bullish Wagers Drop to Six-Month Low

Hedge funds and money managers reduced net-long positions across 18 U.S. futures and options by 5.6 percent to 758,256contracts in the week ended Dec. 18, the lowest since June 26, U.S. Commodity Futures Trading Commission data show. Gold holdings dropped to the lowest since August, while those for silver tumbled 14 percent, the most since July 24. Traders turned bearish on wheat for the first time in six months.

Christmas holiday on ending the showdown over $600 billion of automatic tax increases and spending cuts scheduled to start in January. U.S. consumer confidence fell to a five-month in December as Americans grow more concerned about the possibility of higher taxes, figures showed the same day.

The Thomson Reuters/University of Michigan U.S. consumer sentiment index fell to 72.9 in December, the weakest since July. Economists in a Bloomberg survey projected a final reading of 75. Congress won’t reach a deal this year on a budget plan, Representative Kevin Brady, a Texas Republican, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt.” The Congressional Budget Office says failing to avert the fiscal cliff may cause a recession in 2013.

The U.S. economy will probably be resilient and support rising demand for commodities, saidJames Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $325 billion of assets.

China is the biggest consumer of everything from cotton to copper, and the U.S. uses the most crude oil and corn.

Bullish silver wagers dropped to a five-week low of 30,119 contracts, and those on gasoline reached the smallest since July. Bets on a gold rally fell 13 percent to 112,421 contracts, the lowest since Aug. 21. Bullion declined 2.2 percent last week, the fourth straight loss, as inflation remains in check even as the Fed expanded its third round of monetary easing this month. The cost of living fell more than forecast in November as energy prices dropped, the Labor Department reported Dec. 14.

Investors turned bearish on wheat for the first time since June 19 as wet weather improved the condition of the U.S. winter crop. The net-short position totaled 6,433 contracts, compared with net-long bets of 11,219 a week earlier.

“If there’s concern that we’re going over the fiscal cliff and the U.S. economy is going to have a recession, clearly that weighs on commodities,” said Adrian Day, who manages about $170 million of assets as president of Adrian Day Asset Management in Annapolis, Maryland. “For the next few weeks, we could see continued weakness.”   (Source Bloomberg )

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