Hedge funds and other money managers are increasing bets on gold as bullion hits a series of new highs amid accelerating inflation. Overweighting precious metals has become the consensus among major money managers, with 83% of them in the long-position asset class, a new Citi analysis of top investors with more than $18 trillion in control shows. The survey also found that gold is the only commodity that major allocators have increased over the past month. This week, gold futures settled at a record high above $2,400 an ounce. The precious metal has shown growth for the third week in a row. Investors are driving up the price of the precious metal as geopolitical risks rise and inflation accelerates again. Gold is often used as a hedge against inflation due to its limited supply. “The rally was driven by a powerful cocktail of safe-haven and hedge fund buying driven by record high equity prices and persistent inflation,” James Steel, chief precious metals analyst at HSBC Securities, said in a note. “This, in turn, creates strong buying momentum.” @GC.1 Mountain Gold Year-to-date, professional speculators’ net long positions in gold futures and options hovered near their highest level since 2020 as of April 9, according to the latest data from the Commodity Futures Trading Commission. David Neuhauser, founder of Northbrook, Illinois-based hedge fund Livermore Partners, told CNBC that he recently increased his exposure to gold to more than 20%, including shares of gold mining companies and the yellow metal itself. “Because inflation is well above trend and extremely persistent, it doesn’t take a rocket scientist to figure out that gold could play a huge role,” Neuhauser said in a phone interview. “We are facing structural changes in terms of inflation, and gold will be the metal that will continue to find investors concerned about monetary unrest, concerned about the depreciation of the money supply.” Neuhauser said he expects the bar to reach $3,000 in the next few years. Notably, Greenlight Capital’s David Einhorn has made gold a “very large position” as a defensive play against a potential market downturn. “There is a problem with the country’s overall monetary and fiscal policies, and if both policies are systemically too loose, I think the deficit ends up being the real problem. And I think it’s a way to hedge the risk of something not being very good that happened,” Einhorn said in early April. The hedge fund star revealed that he not only owned the popular SPDR Gold Trust (GLD), but also bought physical bars. Deutsche Bank on Tuesday raised its gold price forecast to $2,400 an ounce by the end of the year and $2,600 by the end of 2025. The updated forecast is based on recent investment inflows, which have a long-term impact on prices, the bank said.
