Hedge funds bullish gold bets surge to 13.8m ounces.

On Monday the metal hit a high above $1,380, the best level since June and up 14.8% since the start of the year.

Long positions – bets that the price will go up – held by so-called managed money increased to 151,939 lots in the week to February 18 according to Commodity Futures Trading Commission data released after the close of business on Friday.

At the same time short positions, indicating weaker prices ahead, were cut by 7,563 to just under 13,510, which translates on a net basis hedge funds holding 138,429 lots or 13.8 million ounces, the highest in more than a year.

The 12.5% jump was the sixth week in a row that large investors increased bullish positions and more significantly it showed fresh buying, compared to the increases of previous weeks which were to cover short positions.

In December 2013 longs fell to a paltry 26,774 lots while shorts held by large investors peaked at more than 80,000 lots, the highest since 2007, back when gold changed hands for $700 an ounce.

It's not only gold derivatives that are finding favour from the smart money in 2014.

Read More: www.mining.com/hedge-funds-bullish-gold-bets-surge-to-13-8m-ounces-81404/