Gold analysts are the most bullish in a year on speculation that investors are reducing near-record bearish bets after the biggest plunge in prices since 1981.
Fifteen analysts surveyed by Bloomberg News expect gold to rise this week, two are bearish and four neutral, the highest proportion of bulls since December 2012. Short positions held by hedge funds and other large speculators jumped almost fourfold from October to Dec. 24 as the bear market deepened, the latest U.S. Commodity Futures Trading Commission data show. Prices rebounded as much as 5 percent since slumping to a six-month low on Dec. 31.
Gold retreated for the first time in 13 years in 2013 as an improving economy spurred speculation the Federal Reserve would curb stimulus. More than $73.4 billion was erased from the value of gold-backed funds as some investors lost faith in the metal as a store of value. Bullion rallied as much as 21 percent in two months through August as traders cut short positions and prices that slipped to a 34-month low in June boosted demand for jewelry, coins and bars.