Fifteen analysts surveyed by Bloomberg News expect gold to rise this week, two are bearish and four neutral, the highest proportion of bulls since December 2012. Short positions held by hedge funds and other large speculators jumped almost fourfold from October to Dec. 24 as the bear market deepened, the latest U.S. Commodity Futures Trading Commission data show. Prices rebounded as much as 5 percent since slumping to a six-month low on Dec. 31.

Gold retreated for the first time in 13 years in 2013 as an improving economy spurred speculation the Federal Reserve would curb stimulus. More than $73.4 billion was erased from the value of gold-backed funds as some investors lost faith in the metal as a store of value. Bullion rallied as much as 21 percent in two months through August as traders cut short positions and prices that slipped to a 34-month low in June boosted demand for jewelry, coins and bars.

“There is some sense that the market is primed for a short-covering rally,” said Ross Norman, chief executive officer of Sharps Pixley Ltd., a brokerage handling physical bullion in London. “The deeper you push it underwater, the more it’s going to spring back when it does recover. Physical demand at the moment is very robust.”

Gold Prices

Bullion reached a two-week high of $1,241.30 an ounce in London on Jan. 3 and ended the day at $1,237.01, rebounding from last year’s 28 percent slide. The Standard & Poor’s GSCI gauge of 24 commodities fell 2.2 percent in 2013, while the MSCI All-Country World Index of equities gained 20 percent. The Bloomberg U.S. Treasury Bond Index lost 3.4 percent.

Bullion slipped the past four months and reached $1,182.27 on Dec. 31, within 0.1 percent of the June low. It rebounded since then as some investors closed out bearish wagers, and as physical buyers viewed prices near $1,200 as attractive, HSBC Securities (USA) Inc. wrote in a Jan. 2 report.

The U.S. Mint sold 56,000 ounces of American Eagle gold coins in December, the most since June and contributing to a 14 percent gain in annual sales, data on its website show. Australia’s Perth Mint sold 41 percent more gold in 2013 and Turkey’s imports climbed 64 percent last month to the highest since July, data on the Istanbul Gold Exchange’s website show.

Chinese Demand

Purchases may rise before China’s Lunar New Year festival on Jan. 31, said Mark O’Byrne, a director at GoldCore Ltd., a brokerage in Dublin. The premium to take immediate delivery gold in China was $21.07 an ounce on Jan. 2, compared with an average of $16.21 in December and $10.07 in November, data compiled by Bloomberg show. The nation probably overtook India as the biggest user last year, the World Gold Council has said.

While Chinese demand helped boost prices, the rally may stall above $1,230, Australia & New Zealand Banking Group Ltd. wrote in a Jan. 2 report. Gold’s “downtrend remains in place” as investors continue to sell metal through exchange-traded products, the bank said.

Bullion-backed ETP holdings declined every month last year and slipped 79.1 metric tons in December, the most since June, data compiled by Bloomberg showed. They fell to 1,759 tons on Jan. 2, the lowest since October 2009. Billionaire John Paulson, the largest investor in the biggest gold ETP, said in November that he personally wouldn’t invest more money into his own gold fund because it’s not clear when inflation will quicken.

Fed Stimulus

Fed officials said Dec. 18 they will trim monthly bond purchases to $75 billion from $85 billion, easing concern about faster consumer-price gains. The program will probably end in December 2014, economists surveyed by Bloomberg last month said. Gold rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system.

Hedge funds and other speculators held 76,052 contracts betting on price declines by Dec. 24, near July’s record of 80,147 contracts, CFTC data show. Their net-long position is 7.2 percent above a six-year low reached on Dec. 3, the data show.

The metal slumped 36 percent since reaching a record $1,921.15 in September 2011. Prices will rebound to $1,300 in three months, before declining to $1,110 in a year, Goldman Sachs Group Inc. wrote in a Dec. 5 report.

Gold will average $1,169 this year, the least since 2009, DZ Bank AG forecast in a Dec. 20 report. Credit Suisse Group AG projects an average of $1,180, while Barclays Plc predicts an average of $1,310 this year and $1,190 in 2015.