London: Gold traders are the most bullish in three weeks after hedge funds boosted their wagers on higher prices on speculation Europe's debt crisis and slow US growth will spur demand for the metal as a protection of wealth.
Twenty-eight of 32 people surveyed by Bloomberg expect bullion to rise on the Comex in New York this week, the most since October 14 and the second increase in a row. Money managers boosted their combined net-long position in New York gold by 8.7 per cent in the week to October 25, US government data show. Traders expect lower copper and raw-sugar prices this week, and gains in corn and soybeans, surveys showed.
Gold climbed above $1,760 (Dh6,464.57) an ounce last week for the first time in six weeks and investors increased their holdings in gold-backed exchange-traded products to a two-month high. Federal Reserve chairman Ben Bernanke signalled more monetary stimulus may be needed to cut unemployment, while the European Central Bank unexpectedly lowered interest rates on Thursday.
Perfect conditions
"The conditions are perfect" for gold, said Mark O'Byrne, the Dublin-based executive director of GoldCore Ltd, a brokerage that offers investors quarter-ounce British Sovereigns up to 400-ounce gold bars. "We have unprecedented levels of risk in markets. We still have ultra-loose monetary policy and the debasing of currencies. That's obviously bullish for gold."
Gold climbed 24 per cent this year to $1,758.50 yesterday, heading for an 11th consecutive annual advance. It's the second-best performer behind gasoil in the Standard and Poor's GSCI Index of 24 commodities, which rose 3.7 per cent. The MSCI All-Country World Index of equities fell 6.4 per cent and Treasuries returned 8.5 per cent, according to a Bank of America Corp index.
Estimated rise
Bullion may rise 11 per cent to a record $1,950 by the end of the first quarter, according to the median estimate of eight of the ten most accurate forecasters tracked by Bloomberg over the past two years. Prices jumped 6.8 per cent last week, the most since January 2009.
Money managers increased their net-long position in Comex futures by the most since August to 138,846 contracts in the week ended October 25, Commodity Futures Trading Commission data show. ETP holdings rose 23.1 metric tonnes last month, the most since July's 96.4 tonnes, and touched a two-month high of 2,281.6 tonnes on Thursday.
Central banks bought 220 tonnes this year, according to data available at the end of September, and emerging economies will be big buyers as purchases continue for the next few years, the World Gold Council said last week.
Source; http://gulfnews.com/business/markets/gold-traders-more-bullish-on-prices-in-short-term-
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