UPDATE 1-Managed money ups gold net longs, cuts copper shorts
* Specs raise gold 30 pct, most bullish since early May
* Copper trims net shorts to smallest since mid-May
July 9 (Reuters) - Hedge funds and money managers boosted their bullish bets in U.S. gold futures and options by 30 percent in the week up to July 3 after a European deal to shore up banks and cut borrowing costs increased bullion's investment appeal.
Speculators also sharply cut their copper net shorts after prices rallied over 5 percent during the period covered, data from the Commodity Futures Trading Commission (CFTC)'s Commitments of Traders showed.
However, traders said the specs might have already lessened their bullish bets as prices had declined following the CFTC report.
Specs raised their net longs in gold by 24,118 to 108,278 lots in the period, the most bullish position in 10 weeks since early May.
"That's a dangerous sign because unless we get into a one-way bull market, which I don't think is likely, it leaves the market vulnerable to fund liquidation," said Bill O'Neill, partner at LOGIC Advisors, a wealth manager that specializes in commodities investment.
"It shows that there maybe some short-term speculative access in the market."
U.S. gold futures gained 2.2 percent during the period covered by the CFTC report.
European Union leaders agreed to let their rescue fund inject aid directly into stricken banks from next year and intervene on bond markets to support troubled member states.
Monetary stimulus by central banks and governments is bullish for gold, which has been a favorite among hedge fund managers and institutional investors to hedge against the loss of purchasing power due to currency depreciation and inflation.
The group also increased their net longs in silver by 3,700 to just 6,588 contracts.
In bellwether industrial-metal copper, speculators trimmed their net short position in copper by 12,020 to 1,749 contracts, the smallest net short since the week of May 15, when the copper market was long.
U.S. copper futures had gained 5.2 percent during the period covered by the CFTC report.
"Copper has showed signs of bottoming. It signaled the sentiment maybe turning around as the market, in my opinion, was over sold," O'Neill added.
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