Hedge funds raised bullish gold bets to eight-week highs as signs of stronger Chinese demand drove prices to the longest rally since August. Goldman Sachs Group Inc. predicted the gains will be short-lived. The net-long position in gold climbed 7.6 percent to 43,277 futures and options in the week ended Jan. 14, U.S. Commodity Futures Trading Commission data show. Long wagers rose 4.7 percent, outpacing the 2.9 percent gain in short trading. Net-bullish holdings across 18 U.S.-traded commodities advanced 2.6 percent, led by cattle, silver and soybeans. Gold, up for four straight weeks, rebounded 4.4 percent this month after a 28 percent plunge in 2013 that was the biggest since 1981 as some investors lost faith in gold as a store of value. Lower prices are attracting buyers in Asia, with deliveries by the Shanghai Gold Exchange almost doubling in 2013. The bear market is unlikely to reverse, and bullion will “grind lower” over 2014 as the U.S. economy gains momentum, Goldman analysts said in a Jan. 12 report.
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