HEDGE funds are betting on a solid rise in the price of gold in 2006 as traders look to decrease reliance on bonds, stocks and currencies, according to a Bloomberg report. It is speculated that the metal will rise by three-fold in the next five months.

Hedge fund managers held 49,022 contracts in gold futures in July which increased to 154,522 in December. Industry insiders believe the precious metal will continue to soar in 2006, following record gains last year. The consensus is that the price of gold bullion will average $525 an ounce in 2006.

The current consensus, however, falls well short of predictions made by many in the industry late last year when the price of gold smashed the symbolic $500 an ounce for the first time since 1987. Many onlookers insisted that the value of gold would soon rocket to $600 an ounce, with the most bullish spectators even pinpointing $1,000 an ounce as a possible target.