Hedge funds raised wagers on a gold rally as speculation that the Federal Reserve will hold off on curbing stimulus drove prices toward the biggest gain in 18 months. Goldman Sachs Group Inc. expects the rally to reverse.
Money managers increased their net-long position by 26 percent to 70,067 futures and options as of July 23, U.S. Commodity Futures Trading Commission data show. The fourth consecutive weekly gain is the longest streak since October. Bullish wagers across 18 U.S.-traded commodities gained 7.4 percent to 615,140. Investors more than doubled bets on lower corn prices to a record net-short holding.
Gold futures rose 8.6 percent in July, heading for the largest monthly gain since January 2012, as Fed Chairman Ben S. Bernanke damped speculation that a cut in bond purchases is imminent. The metal remains in a bear market reached in April and is heading for the first annual loss in 13 years after some investors lost faith in bullion as a store of value. Goldman said July 22 that prices are likely to decline.