Gold prices shoot up 2.6% as ‘shorts’ shrink

By Barbara Kollmeyer and Carla Mozee, MarketWatch

MADRID (MarketWatch) — Gold futures shot higher on Monday after data showed some investors expect prices for the precious metal to rebound after their recent selloff. Copper, meanwhile, continued to fall after Goldman Sachs cut its forecasts for the metal.

Extending earlier gains, gold for June delivery GCM3 +2.73%  advanced $35.70, or $2.6%, to $1,431 an ounce during European trading hours.

After the close of regular-session trading on Friday, data from the Commodity Futures Trading Commission’s Commitments of Traders report showed managed money — which include hedge funds and commodity trading advisors — took advantage of the steep drop in gold prices to cut down their “short” bets, or bets that prices will go lower. 

The report covered reportable positions among traders as of April 16, the date after gold futures suffered their biggest one-day decline since the 1980s.

The selloff in gold recently has apparently pushed up purchases of physical gold, according to bullion dealers.

Gold prices last week finished with a loss of 7%.

Analysts have said a number of factors have contributed to the drop in gold prices, including declines in gold holdings among exchange-traded funds, worries that central banks will start selling gold reserves, and a lowered gold price forecast at Goldman Sachs.

As the new trading week got under way, May silver SIK3 +2.66%  rose 54 cents, or 2.3%, to $23.49 an ounce. Prices last week fell nearly 13%.

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The front-month April copper HGJ3 -0.81%  , meanwhile, on Monday lost 2 cents, or 0.6%, to $3.13 a pound.

Goldman Sachs on Monday cut its 3-,6- and 12-month copper forecasts on the heels of a heavy selloff over the past two months, citing China concerns and bearish indicators.

The forecasts were lowered to $7,500 per tonnes from $8,000 on a three-month basis, to $8,000 from $9,000 for six months and to $7,000 per tonnes from $8,000 for 12 months.

July platinum futures PLN3 +1.16%  rose $15.10, or 1%, to $1,439 an ounce and palladium for June delivery PAM3 +0.72%  gained $4.30, or 0.6%, to $681.90 an ounce.

Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer. Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.