(Bloomberg) — Traders are abandoning bearish bets on gold as the yellow metal surges to all-time highs.
Short interest as a percentage of shares outstanding on the $75 billion SPDR Gold Shares exchange-traded fund, ticker GLD, is near the lowest level since July 2009, according to data from IHS Markit Ltd. Meanwhile, bullish call option volume in the ETF posted its second-biggest jump ever last week before bullion climbed to a record $1,946 per ounce Monday.
What began as a haven bid amid the coronavirus pandemic has been kicked into overdrive by central bank stimulus as slumping real interest rates — which strip out the effects of inflation — drive investors into gold. The bullish momentum along with a tumbling dollar has fueled “stunning” speculation in precious metals, according to analysts at Sundial Capital Research Inc.
“The popular narrative is that government monetary support will lead to inflation and currency debasement, so buy precious metals as a hedge,” Sundial’s Troy Bombardia wrote in a note Monday. “Regardless of whether this theory is right or wrong, the fact remains that traders are full-bore bullish on metals.”