Assets in global exchange-traded products backed by bullion fell 20 percent this year as some investors lost faith in the metal as store of value. U.S. consumer prices climbed 1.1 percent in the 12 months through April, according to a measure watched by the Fed that excludes food and fuel. That matches the smallest increase since records began in 1960. The World Bank raised its 2013 U.S. growth forecast to 2 percent on June 12, from a January prediction of 1.9 percent.

Paulson & Co.

Paulson & Co. said it has no intention of closing down its Gold Fund even after this year’s losses, according to a letter to investors obtained by Bloomberg News. The company recommended investors stay invested as valuations provide “significant upside.” Paulson is the biggest investor in the SPDR Gold Trust, the largest bullion ETP.

St. Louis Fed President James Bullard said June 10 that inflation below the central bank’s 2 percent target may warrant prolonging bond buying. The International Monetary Fund sees the Fed maintaining large monthly bond purchases until at least the end of this year and urged the central bank to carefully manage its exit plan to avoid disrupting financial markets in its annual assessment of the U.S. economy released June 14.

“If quantitative easing does continue for too long, that could certainly lead to inflation,” said Christopher Burton, a fund manager at Credit Suisse Asset Management in New York who helps oversee $10.8 billion in commodity related assets. That “would generally correspond to higher commodity prices,” he said.

Total outflows from commodity funds were $315 million in the week ended June 12, according to Ian Wilson, a managing director for Cambridge, Massachusetts-based EPFR Global, which tracks money flows. Investors withdrew $277 million from gold funds, according to EPFR.

Goldman Sachs

Gold will continue to slide over the medium term on a “re- acceleration” in U.S. growth and a further unwinding of ETF positions, Goldman Sachs Group Inc. said in a report June 12. The bank sees the metal trading at $1,345 in 12 months.

Bullish bets on crude climbed 9.5 percent to 232,273 contracts, the highest since March 27, 2012, CFTC data show. Crude prices added 1.9 percent last week, the second consecutive gain. Palladium holdings climbed for a fifth week, the longest streak since February. Prices in New York slumped 3.9 percent last week, the most since April.

Investors increased their net-short position in copper to 18,772 contracts, from 6,626 a week earlier, CFTC data show. Prices fell for a fifth week, the longest slump since Nov. 9. Supplies will outpace demand by 162,000 metric tons this year, from a surplus of 41,000 tons in 2012, Barclays Plc said June 14.