Hedge funds and money managers boosted combined net-long positions across 18 US futures and options by 7.3% to 1.03 million contracts in the week ended February 21, Commodity Futures Trading Commission data show. Thats the highest since September 13. Bullish wagers on gold climbed to a five-month high, and bets on crude oil rose to the most since May.
The Standard & Poors GSCI Spot Index of 24 commodities capped its biggest weekly increase of the year last week, touching a nine-month high on February 24. US consumer confidence rose more than forecast in February, and new-home sales topped estimates. Goldman reiterated an overweight recommendation on raw materials on February 22.
The US is showing better signs of self-sustaining economic activity, said Michael Strauss, who helps oversee about $27 billion of assets as chief investment strategist at Commonfund in Wilton, Connecticut. What we see is reasonable global growth this year, which should be supportive of gains in overall commodities. Stocks and commodities advanced after euro-area finance ministers approved 130 billion euros ($175 billion) in aid for Greece last week to avert a default. China, the worlds biggest consumer of everything from pork to soyabeans, said February 18 that it will cut reserve requirements for banks to spur growth.
German business confidence rose more than economists forecast to a seven-month high in February, the Munich-based Ifo institute said on February 23.
The S&P GSCI gauge climbed 3.9% last week, the biggest gain since December 23. The MSCI index of equities rallied 0.9%, with about $557.7 billion added to the value of global stocks. The yield on 10-year Treasuries rose 2.6 basis points, or 0.026 percentage point, to 1.98%, according to Bloomberg Bond Trader prices.
Fifteen of the raw materials tracked by the S&P GSCI climbed last week, led by gains in industrial metals. Lead surged 8%, aluminum advanced 7.5%, and zinc rose 6.9%. The gauge fell 0.5% to close at 711.62 in New York.
The number of contracts outstanding across the 24 commodities tracked by S&P rose 1 percent last week, boosting this years increase to 14%, exchange data show. Funds have lifted wagers for five straight weeks, the longest stretch since December 2010, CFTC data show.
Investors added $571 million to commodity funds in the week ended February 22, according to data from Cambridge, Massachusetts- based EPFR Global, which tracks money flows. Gold and precious- metals inflows totaled $210 million, said Cameron Brandt, the director of research. The latest commodity flow numbers is catch-up with previous positive trends, Brandt said. People are moving into them based on a string of relatively positive numbers. Whether those will continue to carry weight is a little more questionable.
While Goldman forecasts more gains, the bank lowered its 12-month prediction for commodity returns to 12% from 15% after prices rallied, analysts led Jeffrey Currie said.