NEW YORK (Reuters) - Index funds increased their bullish exposure to commodities in July for the first time in three months amid signs of a better economy and higher oil and gold prices, Commodity Futures Trading Commission data showed on Thursday.
The value of net-long index fund investments in U.S. commodities rose by nearly $9 billion, or 5 percent, to $193.4 billion at the end of last month, according to the CFTC’s monthly Index Investment Data report.
It was the first time since March that the agency cited a higher net-long value for index investments across the 21 commodity markets it tracks in the report.
The CFTC data is usually issued a month late and in the final week of every month. Despite July’s rebound, net length through the first seven months of the year was still down $16.7 billion, or 8 percent, from the end of last year.
The Thomson Reuters-Jefferies CRB index .TRJCRB, a broad commodities indicator that tracks 19 mostly U.S.-traded raw materials markets, rose 3 percent in July after a 2 percent decline every month between April and June.
July’s turnaround in commodities came after signs of better stability in the U.S. economy and job market. The Federal Reserve’s assurance that its monetary stimulus will be largely retained even if there were cutbacks drove gold prices up 7 percent for the month. Worries about supply outages in oil took U.S. crude up nearly 9 percent.
“People are cautiously returning to commodities as the rise in oil and gold prices have helped dispel some of the earlier pessimism,” said Peter Buchanan, senior economist at CIBC World Markets in Toronto.
The CFTC data showed the net-long index investment value in U.S. crude oil rising by nearly $2 billion from the end of June to $34.4 billion at end-July.
Net longs in gold rose by almost $1.5 billion to $15.4 billion.
Other commodities with significant gains in net long value included gasoline, which had a rise of $1 billion; copper, which grew by $600 million; and natural gas, which climbed by $300 million.
For more on CFTC's Index Investment Data, go to here@marketreports/documents/file/indexinvestment0613.pdf
Reporting by Barani Krishnan; Editing by Gerald E. McCormick and Bob Burgdorfer