Hedge funds pile into gold, gas for second week

NEW YORK Fri Oct 12, 2012 5:47pm EDT

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NEW YORK (Reuters) - Hedge funds and other big speculators piled into the rallying gold and natural gas markets for a second week running, taking the net long money in U.S. commodities up by nearly $1 billion, trade data showed on Friday.

The so-called "money managers" in commodities boosted their net longs in gold to the highest level in nearly 16 months, while taking bullish bets in gas to 8-week peaks, according to the data issued by the Commodity Futures Trading Commission.(CFTC)

Reuters' calculations of the CFTC's Commitment of Traders data showed the value of the net long position held by money managers in some 22 U.S. commodity markets tracked by the CFTC rose by around $900 million in the week to October 9, touching nearly $114 billion.

The figures are calculated by Reuters based on the change in net positions from the week before, multiplied by the contract's value at the end of the period. Because most investors trade commodities on margin, the change in the value of positions is not directly equivalent to total investment.

Managed money's net length in gold futures and options traded on New York's COMEX rose by 2,547 lots to 198,194 lots in the week ended October 9 -- the largest such holding since August 2011.

Gold posted four straight months of gains prior to October. Last week, it hit 11-month highs just below $1,800 an ounce.

While the precious metal saw some profit-taking this week -- closing on Friday with the sharpest weekly decline since June -- some analysts expect a rebound due to euro zone debt worries and economic uncertainties.

Prospects of a U.S. "fiscal cliff" of automatic spending cuts and tax increases scheduled for January could also shock the U.S. economy and lead to more money printing from the Federal Reserve, analysts said.

In natural gas, money managers added 13,119 contracts in NYMEX natural gas futures and options, NYMEX Henry Hub Swaps, NYMEX Henry Hub Penultimate Swaps, and ICE Henry Hub Swaps, for a net long position of 151,942. It was the largest net long position in eight weeks for speculators in gas.

The front-month contract for NYMEX natural gas hit a 2012 peak of $3.638 per million British thermal units (mmmBtu) in Friday's session. Gas prices have gained nearly 30 percent since the end of August, helped by light stockpile builds amid cooler weather forecasts in the U.S. Northeast.

(Editing by Sofina Mirza-Reid)

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