Record Gold Hoard Spurs Bullish Bets From Traders

Gold traders are more bullish after investors accumulated the biggest-ever hoard of the metal, with Europe’s deepening debt crisis driving them to protect their wealth with this year’s second-best performing commodity. Eighteen of 26 surveyed by Bloomberg expect bullion to rise next week. Holdings in exchange-traded products backed by gold reached a record 2,350.8 metric tons on Nov. 23, now valued at $128.5 billion, according to data compiled by Bloomberg. Hedge funds and other speculators increased their net-long position, or bets on higher prices, for four weeks, the longest stretch since March, Commodity Futures Trading Commission data show.Almost $12 trillion was wiped off the value of global equities since May on mounting concern about slower global growth, driving investors to what are perceived as the safest assets. Yields on Treasuries fell to a near-record low and gold is heading for an 11th consecutive annual gain. Bullion beat every other member of the Standard & Poor’s GSCI gauge of 24 commodities this year except for gasoil.

“There’s absolutely no doubt that people are still worried,” said Carole Ferguson, an analyst at Fairfax IS in London. “The market’s being constantly confronted with the flow of bad news. Gold’s still an asset that people will look at.” Gold investment jumped 33 percent to 468.1 tons in the third quarter from a year earlier as bar and coin demand in Europe more than doubled to the most since the fourth quarter of 2008, according to the London-based World Gold Council. Purchases by central banks, which are adding to reserves for the first time in a generation, may reach 450 tons this year, according to Marcus Grubb, managing director of investment research at the council. Central banks and government institutions bought 142 tons last year, IMF data show.

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