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Precy Dumlao, Opalesque Asia:

Heavy buying by hedge funds last week lifted the gold price to its highest level since October 2011 which finished in the spot market at $1,277.60 an ounce on Comex, various media reported. Spot gold is currently trading up 0.5% to $1291.

Proactive Investors cites data from the U.S. Commodity Futures Commission (CFTC) for July 9 that showed that futures market rose 5.4% last week and speculators increased their net-long positions over 4% to 35,691 futures and options on news that Federal Reserve’s chairman Ben Bernanke would pull back on the quantitative easing package.

The report adds that retail buying in China is also contributing to gold’s continued luster. As bullion fell to a 34-month low in June, buyers of the physical metal in bars, coins a jewellery jumped, the report said.

In related news, Oanda.com quoted Bernanke as saying that the U.S. needs "highly accommodative monetary policy for the foreseeable future."

"Bernanke’s comments put some positive feeling back into gold and into all commodities," Ouando.com quoted Dan Denbow, as saying. Denbow is a fund manager at the $1bn USAA Precious Metals & Minerals Fund which is based San Antonio.

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