Short covering drives gold prices as bullish hedge funds mostly sit on the sidelines
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According to the CME FedWatch Tool, markets see an 85% chance that the Federal Reserve will raise the Fed Funds rate by another 75 basis points in November. Commodity analysts at Commerzbank said that real interest rates are on track to rise to 1.7%, its highest level since August 2009. Gold's net short positioning now stands at -6,875 contracts, down 84% from the previous week. Gold's bearish positioning is at its lowest point since early August.
While gold could continue to struggle because of solid bullish momentum in the U.S. dollar and rising bond yields, Nicky Shiels, head of metals strategy at MKS PAMP, said there appears to be some underlying strength in the marketplace. Based on the data, gold's move was overextended by about $50, she added.
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