Gold nudged lower again on Monday for the third day in a row as speculators ramped up their short positions in the metal.
The number of gross short positions jumped by almost double, up 9.00mln ounces (moz) so far this month to around 18.50moz.
Conversely, gold net longs declined by 4.49moz to 2.45moz, the lowest level since mid-September, as investors gear up for the prospect of the Federal Reserve raising interest rates in December.
It means speculative positions in gold have been cut back by a total of 15.05moz over the past four weeks.
Joni Teves, an analyst at UBS, said: “An adjustment in positioning was warranted, as market participants anticipate a December Fed rate hike.
“But the speed and magnitude of the washout – and particularly the increase in gross shorts – raises possible short-covering risks up ahead.”
The lighter positioning creates better conditions for a post-rate hike recovery, she said, particularly if the Fed signals a slower pace after lift-off, as there will already be a high number of short positions on the metal.
As David Govett, head of precious metals at bullion trader Marex Spectron, said: “The markets will continue to stay in the doldrums, waiting and watching for anything Fed related. December cannot come soon enough!”
Gold was trading US$8 lower to US$1,070 on Monday.
Elsewhere, silver eased 0.4% to US$14.12 while platinum lost 0.6% to US$848.
Randgold Resources down 42p to 3,934p
Fresnillo down 4p to 691p
Anglo American down 8p to 438p