Gold price: Hedge funds reverse historic bearish position

On Friday, the gold price built on recent gains to trade at a six-week high after panic about China's economic slowdown saw US stock markets suffering one of its worst one day falls since the global financial crisis.

In late afternoon dealings in New York, gold futures with December delivery dates added $6.70 or 0.6% to $1,159.90 an ounce, ending at the highs for the day in massive volume with roughly double the daily average number of contracts changing hands.

Gold is now up 7% from a more than five-year closing low of $1,084 struck August 5 as China's economic woes and shock currency devaluation send  ripples through markets and burnish gold's allure as a storer of wealth. Gold was also boosted by Fed minutes released on Thursday that indicated a rate hike is less likely in September which hurt the dollar.

The turnaround in sentiment has also spread to large speculators on the futures market which until this week held bearish positions not seen since at least 2006, when the Commodity Futures Trading Commission first began tracking the data.

According to the CFTC's weekly Commitment of Traders data for the week to August 18 speculators' short positions– bets that gold could be bought cheaper in the future –were cut by more than a million ounces to 10.4 million ounces (295 tonnes); down from record levels of more than 330 tonnes hit last month.

At the same time longs grew by 500,000 ounces which means large gold futures investors such as hedge funds, referred to as "managed money" now hold a net long or bullish position, albeit a small one.

That reverses the net short position entered into during the week to July 21 for the first since at least 2009.