By Frik Els
On Monday, gold consolidated post-Brexit gains to settle on the futures market in New York at the highest price in two years.
In afternoon trade gold futures on the Comex market for delivery in August, the most active contract, was last exchanging hands for $1,327.80 an ounce up $5.40 from Friday's close. On Friday , the metal hit an intra-day high of $1,362.60 the highest since July 2014. The metal is enjoying one of its best years in decades trading up 25% or more than $260 an ounce so far in 2016.
Gold's allure as a safe haven asset has been burnished by the shock referendum result in the UK, a collapse in bond yields, and volatility on equity and currency markets.
Ahead of the Brexit vote large scale gold futures and options speculators or "managed money" investors such as hedge funds continue to position themselves for further gains in the gold price with bullish bets hitting a record high.
Hedge funds dramatically raised bearish bets on gold during the final months of 2015 pushing the overall market into a net short position – bets that gold could be bought back at a lower price in the future – for the first time since at least 2006, when government first started to collect the data.
The trend was thoroughly reversed this year however with investors steadily building long positions – bets on higher prices – pausing only briefly in May when gold's 2016 rally appeared to run out of steam.