2014.07.0802:07:26UTC+00Hedge funds leading charge of renewed gold interest

Gold is fast becoming a favorite for investors once more after being dumped beginning last year in favor of other securities.

Previously thought to continue a downward sloping trend this year, the metal has defied bearish predictions with five straight weeks of gains in a rally to redeem itself from the sharp drop it experienced in 2013 when it lost 28% of its value. On New York’s Comex market at noontime in Tokyo today, futures for an ounce of gold bullion went up to $1,318.60 for an increase of 0.1%.

Serving in the vanguard of the rally are money managers who have helped push holdings back up by opening more positions that would benefit from a rise in prices. According to the US Commodity Futures Trading Commission, the number of net long trades for gold grew bigger for the fourth consecutive week, gaining 20% in contracts for futures and options as of July 1st. With 136,929 contracts, it has now four times as much long positions than it did in the beginning of 2014.

Exchange traded products (ETP) backed by gold bullion have also recovered from last year’s bear market where they saw their holdings drop consecutively for six quarters. Assets in ETPs expanded last week by 12.8 metric tons to achieve its highest since November 2008 on the back of inflation concerns in the US and global unrest in the countries of Iraq and Ukraine.

Some investment firms, however, are maintaining their outlook from earlier in the year that gold will eventually drop even lower within several months. Oversea-Chinese Banking Corp analyst Barnabas Gan expects prices to be at $1,150 by year end while analysts from Goldman Sachs says bullion will head down to $1,050 in twelve months time.