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Hedge funds increased bets against major gold miners, filings reviewed by Reuters showed, as COVID-19 vaccines weakened expectations for the yellow metal after a year of record gains.

Gold prices have dipped from last year’s record highs above US$2,000 an ounce as vaccines deployed against the coronavirus encouraged investment in assets that perform well during periods of economic growth.

“While we are by no means out of the woods in our view, the light at the end of the tunnel means that gold markets should begin to see an unwind of the trends that became quite exaggerated over the course of 2020,” Royal Bank of Canada analysts said last month.

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The bank cut its 2021 forecast for gold to US$1,810 per ounce from US$1,893.

Short trades as a percentage of total traded volume for Barrick Gold rose to 24.8 per cent for the second half of last month, from approximately 14.9 per cent for the first half of December, according to filings reviewed by Reuters.

Newmont Corp. saw an increase to 11.4 per cent from 8.8 per cent over the same period, while trades in Kinross Gold rose to 20.6 per cent, from 18.2 per cent, according to the data.

Hedge funds typically engage in the practice of short-selling by borrowing a stock from an institutional investor, such as a pension fund, and selling it back at a lower price when shares fall, pocketing the difference.

Tougher lockdown restrictions to combat a new variant of the virus and huge government debt, nonetheless, could propel gold higher.

Short bets against miners Yamana Gold Inc. fell to 17.7 per cent, from 25.7 per cent, while the number for Alamos Gold Inc. fell to 19.5 per cent from 21.9 per cent.

Spot gold rose to its highest in two months on Monday.

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“History has always told us to own gold when central banks run out of control,” said Joseph Boskovich Sr., chairman and chief investment officer at Old West Investment Management in Los Angeles.

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