Money managers raised their net-long positions by 19 percent to 131,687 futures and options contracts in the week to Aug. 28, U.S. Commodity Futures Trading Commission data show.

Combined bets across 18 U.S. commodities fell 1.9 percent to 1.3 million contracts, still near the highest in 15 months. The Standard & Poor's GSCI Spot Index of 24 commodities gained for a fifth straight week, the longest rally since June 2011.

Investors accumulated a record hoard of gold in exchange- traded products last week, exceeded only by the U.S. and Germany when compared with national reserves. U.S. sales of bullion coins jumped 28 percent in August. Fed Chairman Ben S. Bernanke pledged in an Aug. 31 speech to promote growth with “additional policy accommodation as needed.” The metal rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011.

“Anytime they're putting more money into the economy, it's good news for gold,” said Dan Denbow, a fund manager at the $1.8 billion USAA Precious Metals & Minerals Fund in San Antonio. The outlook for monetary stimulus “allows the risk-on trade to come back in to the market.”

Eoin Treacy's view There are a whole range of reasons that have helped support the bull market in precious metals over the last decade. However, the growth in demand for gold as an investment vehicle, either through ETF holdings or more generally as a store of value is a primary driver. Despite the fact that gold prices hit a medium-term peak in September 2011 and fell by 20%, ETF holdings continued to trend higher.

The Total Known ETF Holdings of Gold Index has found support in the region of the 200-day MA on successive occasions over last five years and a sustained move below the trend mean would be required to question medium-term scope for continued upside.

Gold prices appear to have ended the distribution phase of this yearlong consolidation and have entered a process of accumulation. A sustained move back below the $1600 area would now be required to begin to question recovery potential.

Silver has found support above $25 on three separate occasions in the last year. It is currently rallying from the lower side of the range and a clear downward dynamic would be required to check momentum beyond a brief pause.

Platinum retested the $1400 area between June and mid-August when it rallied to break out of the 10-week range. A sustained move below $1500 would now be required to question potential for a further test of overhead trading.

Palladium has been ranging below the 2011 top formation for a year. However, it has found support in the region of $550 on a number of occasions and is currently rallying towards the upper side of the yearlong congestion area. A sustained move above $700 would reassert medium-term demand dominance.