By Frik Els
On Monday gold continued to build on its gains on Friday in response to a worse than expected US jobs report and a weaker dollar.
In thin holiday trade, gold futures trading on the Comex market in New York for delivery in December, the most active contract, were exchanging hands at $1,330.60 an ounce, up more than $20 since the release of the payroll data.
Gold has been on a downward path for more than a month, coming off a two-year high, but year to date the metal is still up 25% or $270 an ounce, one of its best annual performances since 1980.
Large scale gold futures and options speculators or "managed money" investors such as hedge funds were wrong-footed by the negative employment and wage numbers and had been positioning themselves for further declines in the gold price ahead of the Dept of Labor data.
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.