Gold price rally defies bearish forecasts

Gold is precious again. After investors sent bullion tumbling last year by the most in three decades and kept dumping the metal earlier this year, demand is now up and prices are defying bearish forecasts.

Money managers increased net long positions for a fourth consecutive week at the end of last month and holdings in exchange-traded products are climbing at the fastest pace since 2012.

"Gold's performance has proven the bears wrong so far this year," said John Kinsey at Caldwell Securities in Toronto. "We look for further strength through the balance of the year."

While the latest government data points to an improved US economy and Goldman Sachs and Societe Generale predict prices will retreat by the end of the year, inflation concerns and pockets of unrest are sending investors into gold as a haven.

Prices extended gains after the Federal Reserve signalled earlier this month it will keep interest rates near record lows and violence spread in Iraq and Ukraine.