Salient to Investors:

Hedge funds et al reduced net-long positions across 18 US futures and options last week, the largest decline since November 13, as signs of improving US growth reduced demand for gold and rains in South America added to signs that crop harvests will be bigger.

Bets on higher gold prices fell to the lowest since December 2008. Gold is off to its worst start to a year since 2001.

James Paulsen at Wells Capital Mgmt said confidence is building in a sustainable global recovery could hurt gold, while agricultural commodities will pullback in 2013 as weather normalizes.

Dan Denbow at USAA Precious Metals & Minerals Fund said people have become more risk on, and are taking money out of the more defensive assets like gold. George Soros and Louis Moore Bacon cut their stakes in gold ETPs in Q4 2012.

Walter Hellwig at BB&T Wealth Mgmt said signs of a deepening recession in Europe may hurt demand for commodities.

Marubeni Corp said Japan’s stockpiles of aluminum reached the highest in almost four years, signaling waning demand.

Cameron Brandt at EPFR Global said money managers pulled a net $13 million from commodity funds last week, spurred by the sixth straight week of outflows from gold and precious-metals funds, the longest stretch since Q1 2011.

Peter Sorrentino at Huntington Asset Advisors said some of the smart money that’s looking at bigger crops has started to exit, tripping a landslide, and some agriculture commodities may have moved too far, too fast, so we may get a bounce, but not the start of another rally.

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