Managed-money investors increased net long gold positions on COMEX to 154,205 contracts for the week to March 29, the highest level since October 2012, data from the US Commodity Futures Trading Commission showed Monday.
The figure is up 6.4% from 144,899 the previous week and is the fourth consecutive week of additions, data showed.
With each contract worth 100 oz, the total represents around 480 mt of gold.
Institutional investors have built up bullish positions only since January, coinciding with the surge in this year's gold price, after eight weeks of net short positions in November and December.
Gold has gained up to 20% since the start of 2016, trading around $1,220/oz Monday morning.
But recent weakness in the gold price, down around $25-30/oz since last week, could be a result of profit-taking and correction potential from the large volume of speculative interest.
"Part of the price fall since the reporting date could already be attributable to the covering of long positions," Commerzbank said in its daily report Monday.
While interest rate expectations have jumped in recent weeks, which increases the opportunity cost of holding a non-yielding asset such as gold, on more positive economic news from the US.
Manufacturing data from the US released late Friday showed expansion in March for the first time in seven months, adding to better-than-expected jobs data released the same day.
According to Fed Fund Futures Monday there is now a 65% chance of an interest rate hike in the US by year-end.
Meanwhile, SPDR Gold Trust, the world's largest gold-backed exchange-traded product, showed weekly outflows of 5.65 mt for the week ending Friday.
It is the first weekly outflow from the fund this year, according to data released by the company Monday.
Total assets in the fund now stand at 818.1 mt, down from 3.5-year high of 823.7 mt a week earlier.
Net long positions in silver were down 19% at 44,420 contracts, according to CFTC data.
Platinum was down 13% at 14,729 contracts and palladium was 10% lower at 7,403 contracts.
