Gold traders are more bullish after investors accumulated the biggest-ever hoard of the metal, with Europe�s deepening debt crisis driving them to protect their wealth with this year�s second-best performing commodity.

Eighteen of 26 surveyed by Bloomberg expect bullion to rise next week. Holdings in exchange-traded products backed by gold reached a record 2,350.8 metric tons on Nov. 23, now valued at $127.6 billion, according to data compiled by Bloomberg. Hedge funds and other speculators increased their net-long position, or bets on higher prices, for four weeks, the longest stretch since March, Commodity Futures Trading Commission data show.

Almost $12 trillion was wiped off the value of global equities since May on mounting concern about slower global growth, driving investors to what are perceived as the safest assets. Yields on Treasuries fell to a near-record low and gold is heading for an 11th consecutive annual gain. Bullion beat every other member of the Standard & Poor�s GSCI gauge of 24 commodities this year except for gasoil. �There�s absolutely no doubt that people are still worried,� said Carole Ferguson, an analyst at Fairfax IS in London. �The market�s being constantly confronted with the flow of bad news. Gold�s still an asset that people will look at.�

Bullion rose 19 percent to $1,688.50 an ounce this year on the Comex exchange in New York, and reached a record $1,923.70 in September. The S&P GSCI gained 0.7 percent and the MSCI All- Country World Index of equities retreated 16 percent. Treasuries returned 9.7 percent, a Bank of America Corp. index shows.

Declines in Copper

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The traders surveyed by Bloomberg are less bullish on other commodities, anticipating declines in copper, raw sugar and corn next week. Soybeans may advance, the surveys showed.

Investors added 79.5 tons of gold to their ETP holdings since the start of November, on track for the best month since July, data compiled by Bloomberg show. The combined tonnage is greater than the reserves of all but four of the world�s central banks and equal to more than 10 months of global mine supply.

Speculators raised their combined net-long position by 34 percent to 171,632 futures and options contracts since mid- October, the most bullish they�ve been in two months, CFTC data show. Wagers were a record 253,653 contracts in August, a month before prices climbed to an all-time high. European services and manufacturing output contracted for a third month in November, and the region�s industrial orders declined the most in almost three years in September, reports on Nov. 23 showed. Growth in the euro region will drop to 1.1 percent next year, from 1.6 percent this year, the International Monetary Fund forecasts.

Credit Rating

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Portugal�s credit rating was cut to below investment grade by Fitch Ratings yesterday because of the nation�s rising debt and weakening economy. Germany sold 35 percent fewer bonds than its maximum target at an auction on Nov. 23 and the yield on Greek two-year notes was at 121.2 percent today. U.S. debt of the same maturity yields less than 0.28.

Declines in equity markets and commodities may oblige some investors to sell their bullion to cover losses. Gold slipped 3.5 percent last week as raw materials and stocks slumped the most since September. �The need to raise cash and cover margins will likely overhang the market,� said James Moore, an analyst at TheBullionDesk.com in London.

Stronger Dollar

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Gold�s gains also may be curbed by a stronger dollar, said Jesper Dannesboe, an analyst at Societe Generale SA in London. The currency climbed to the highest in seven weeks against the euro today. The 30-week correlation coefficient between the greenback and bullion is now at -0.46, data compiled by Bloomberg show, with a figure of -1 meaning the two always move in opposite directions. Gold investment jumped 33 percent to 468.1 tons in the third quarter from a year earlier as bar and coin demand in Europe more than doubled to the most since the fourth quarter of 2008, according to the London-based World Gold Council.

Purchases by central banks, which are adding to reserves for the first time in a generation, may reach 450 tons this year, according to Marcus Grubb, managing director of investment research at the council. Central banks and government institutions bought 142 tons last year, IMF data show. The purchases may also be a warning. Prices rose to a then- record $850 in 1980 as central banks bought gold, only to drop for most of the next 20 years. Bullion tripled from 1999 through the beginning of 2008 as the banks sold more than 4,000 tons.

Annual Performance

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Commodities are headed for the weakest annual performance since 2008. JPMorgan Chase & Co. cut its recommendation on raw materials to �underweight� on Nov. 22 and said it expects negative total returns for the S&P GSCI index in the next three to six months. Goldman Sachs Group Inc. is forecasting a 15 percent gain for commodities in the next 12 months. Ten of 21 traders and analysts surveyed by Bloomberg expect copper to drop next week. The metal for delivery in three months, the London Metal Exchange�s benchmark contract, declined 25 percent to $7,230 a ton this year.

Raw sugar retreated 29 percent this year to 22.9 cents a pound on ICE Futures U.S. in New York. Seven of 11 people surveyed expect prices to decline next week. Eleven of 20 anticipate a drop in corn, the most bearish outlook in a year, while 10 of 20 said soybeans will advance. Corn slipped 6.2 percent to $5.90 a bushel in Chicago this year, and soybeans slid 21 percent to $11.065 a bushel. �I don�t think people are going to buy commodities very aggressively at the moment,� Societe Generale�s Dannesboe said. �We�re negative in the very near term, but if we don�t get a global recession, then we�ll be approaching possible good buying levels over the next couple of months.�