Hedge funds resume on a golden note

NEW YORK: Hedge funds are stepping back onto the gold bandwagon as political turmoil in Greece and government actions in Asia helped send prices to their biggest monthly advance since June.

Bullish wagers on the metal increased for the first time in three weeks and have more than doubled since mid-November, US government data show. Short holdings dropped for the sixth week in seven. Bullion rose for a second straight month in December.

While cheap oil has kept inflation in check, gold's appeal as an alternative asset got a boost on Greek opposition to austerity measures that may prompt the country's exit from the euro area.China has lowered interest rates and waived some bank lending requirements to help spur growth, while Japan expanded stimulus measures. Bullion prices are up 7.1% since touching a four-year low in early November.

"People are running to gold because it's the last haven after the dollar," said George Gero, a New York-based precious metals strategist who helps manage $500 million at RBC Capital Markets.

"The problems in Greece especially and the possibility, according to the Germans, that they're preparing for Greece to leave the euro, there's geopolitical tur moil," said George Gero. Net-long positions rose 5.7% to 98,391 futures and options, in the week ended on December 30, after dropping 11% in the previous two weeks, according to the US Commodity Futures Trading Commission data published on January 5.

Short wagers slid 8.2%. Bullion futures advanced 0.7% last month and traded at $1,211.20 an ounce by 6:41 am on the Comex in New York.