Hedge funds raised their bullish gold bets to a six-week high, splitting with analysts at Technical Research Advisors and Goldman Sachs who are predicting more declines after last year's rout.
The net-long position in gold jumped 19pc to 34,104 futures and options in the week ended December 31, US Commodity Futures Trading Commission data show. Short holdings slid 4.6pc to 72,571, the lowest since November 19. Net-bullish holdings across 18 US-traded commodities fell for the first time in six weeks as investors became the most bearish on sugar since September.
Gold tumbled 28pc in 2013, the first decline in 13 years and the biggest since 1981, after some investors lost faith in the metal as a store of value. Last month, the US Federal Reserve cut the pace of its monthly bond purchases. Bullion is poised to fall another 19pc to $1,000 an ounce, said Technical Research's Louise Yamada.
While short-term rallies may occur, a so-called "head and shoulder" pattern signals that gold will extend its declines, Ms Yamada, of Technical Research, said. A drop to $1,000 would mark the lowest price since October 2009. (Bloomberg)