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Bullish bets on bullion at highest since 2012

Investors' bullishness on gold at the start of this year looks set to continue, with bets on rising prices for the precious metal rising to the highest level in over 14 months.

According to U.S. Commodity Futures Trading Commission data, gold futures' net-long positions – where investors bet on the price of an asset rising - climbed 3.8 percent to 118,241 in the week ending March 4, their highest level since December 2012. Gold short positions dropped 15 percent to 26,321, the lowest since October 2013.

Gold regained some ground at the start of this year, rising 11 percent to $1338.66, as investors flocked to the metal as a "safe-haven" from the Ukraine-Russia turmoil, as well as concerns over the global economic recovery. This followed a 28 percent plunge in gold prices in 2013.

"The gold price has been pushing up by a couple of factors," Richard Perry, market analyst at Hantec Markets, told CNBC in a TV interview.

"Certainly the insurance trade of the geopolitical risks around the Ukraine, and also the fact that tapering is not tightening. That is helping to sustain this move higher, where the ultra-loose monetary policy around the world of the global central banks has helped this gold price."

(Read more: Is India going back to bullion?)

Continued uptick?

Analysts are split on whether gold will continue the uptick seen at the start of the year.

Holdings in gold ETPs (exchange-traded products) rose in February for the first time since 2012. The SPDR Gold Trust, the biggest of these types of funds, is up 11 percent year-to-date.

AP

Martin Arnold, director-research analyst at ETF Securities, said that proof of gold's "safe-haven" status has been seen, as tensions mounted in the Ukrainian region of Crimea.

"I think we feel it (the gold price) is going to grind higher this year. We have seen just over the last couple of weeks what's happened -- it does provide some good diversification in case there are some risk events," Arnold said in a TV interview.

(Read more: Now that gold touched $1,300, here's what's next)

But the appetite for gold may be a short-term punt, according to Credit Suisse, whose head of head of metals research told CNBC that the yellow metal's price is likely to fall to near the $1000 mark by the end of the year.

"People want gold to hedge against risks and to provide insurance. So gold has come in to its own not surprisingly as an insurance policy, and no more than that," Robin Bhar said in a phone interview. "Strategically we are bearish -- we think gold can fall towards $1000 towards the end of this year, but tactically we think it's worth buying because it can go higher before it goers lower."

India and China demand

Asian demand has been the continual focus surrounding the price of gold, with fears that a so-called hard landing in China could impact demand, after last year's buying spree. India has also been under the spotlight, as tough rules on gold imports were imposed last year in an attempt to tackle the country's crippling current account deficit.

(Read more: Does China plan to use gold to internationalize the yuan?)

The two combined are likely to push the gold price down, according to a note from Morgan Stanley published last month.

Adrian Ash, head of research at Bullion Vault, concurred in a phone interview with CNBC.

"If you look at last year, the price was down very hard, despite record Chinese and Indian demand in the first half of the year. The price had already done its big drop by that point. So the bottom-line is that consumer gold demand, particularly Asian household demand, doesn't move prices higher," he said.

—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal

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