John Paulson still believes in gold.

That has been a painful stance lately. But Monday finally brought some good news for the well-known hedge-fund manager and other gold bulls.

Gold jumped as high as $1,596 an ounce in electronic trading, after settling up $13.80, or 0.9%, at $1,586.20. Concerns about elections in Italy and big spending cuts in the U.S. helped drive the rally.

It was a contrast to the declines seen over the past few months, as an absence of worrisome news helped damp enthusiasm for gold. Prices have fallen 5.3% this year and are down 16% from a record closing high of $1,888.70 set in August 2011. The final three months of 2012 were the metal's worst quarter since the 2008 financial crisis.

While many investors remain skeptical about the long-term prospects for gold, some large hedge funds are beginning to pay a bit more attention as the price has slid.

Behind the troubles for gold have been an improving global economy and stock market, which have left investors searching for riskier investments, such as stocks, and selling safe-harbor investments, like gold. Meanwhile, some who bought gold as a hedge against inflation have dumped the metal because consumer prices have been tame. Others say stocks will do at least as well as gold if inflation rises.

The dollar also has held up, which reduces gold's allure. And interest rates have moved higher, making it more costly to hold gold, which earns no return. Gold-mining stocks have been even more disappointing, partly because of management flubs and poor cash flow in recent years.

Despite all the gold negativity, Mr. Paulson's firm, Paulson & Co., remains among the biggest fans and is holding on to much of its gold stash. Paulson continues to hold the largest position in the SPDR Gold Trust exchange-traded fund, or GLD, with almost 22 million shares, a position he didn't change last quarter. The firm's large positions in gold miners AngloGold Ashanti Ltd., Detour Gold Corp., NovaGold Resources Inc. and Barrick Gold Corp. were barely changed last quarter, according to filings.

It isn't clear if Mr. Paulson has adjusted his gold-derivative positions, which are considered large. But Mr. Paulson has told clients that he believes gold will rise over the long term, as global central banks expand their respective money supplies and inflation eventually picks up. He hasn't, however, been making a new push into gold, his investors say.

A few of Mr. Paulson's colleagues on Wall Street agree with this stance. Giant hedge fund Och-Ziff Capital Management Group LLC added to its position in GLD in the fourth quarter, but the firm has less than 1% of its overall holdings in the ETF, according to FactSet.

The bulls are in the clear minority lately, though. Money managers tracked by the Commodity Futures Trading Commission this month cut their bullish bets on gold futures and options to the lowest level in more than four years. Funds slashed their net bullish bets by 32% during the week ended Feb. 19 to about 42,000 contracts, the lowest November 2008.

Big-name hedge funds and other traders have turned away from gold in recent months, and some say they are staying away.

Steve Mandel's Lone Pine Capital LLC dumped its entire position in the GLD ETF, in the fourth quarter, or nearly 2.6 million shares, according to securities filings. Other well-respected hedge funds, including Moore Capital Management LP and Scout Capital Management LLC, also sold all their positions in GLD in the quarter, according to filings. Representatives of the firms declined to comment.

'Gold has been a momentum trade and people are getting bored with it,' says the head of a major hedge fund.

George Soros's $24 billion Soros Fund Management pulled about $100 million from its holdings in GLD in the fourth quarter, or roughly half of its position. The move, however, didn't reflect a souring on gold, according to people close to the firm, which in the past has used a variety of investments and derivatives to buy and sell gold.

GREGORY ZUCKERMAN / MATT DAY

• lately [´leitli]   ad.近来，不久前   (初中英语单词)
• well-known [,wel´nəun]   a.著名的，众所周知的   (初中英语单词)
• manager [´mænidʒə]   n.经理；管理人；干事   (初中英语单词)
• contrast [´kɔntrɑ:st]   n.对比 v.使对比(照)   (初中英语单词)
• absence [´æbsəns]   n.不在，缺席；缺乏   (初中英语单词)
• enthusiasm [in´θju:ziæzəm]   n.热心；狂热；爱好   (初中英语单词)
• financial [fi´nænʃəl]   a.金融的，财政的   (初中英语单词)
• beginning [bi´giniŋ]   n.开始，开端；起源   (初中英语单词)
• economy [i´kɔnəmi]   n.经济；机制；组织   (初中英语单词)
• meanwhile [´mi:n´wail]   n.&ad.其间；同时   (初中英语单词)
• costly [´kɔstli]   a.昂贵的；费用大的   (初中英语单词)
• partly [´pɑ:tli]   ad.部分地；不完全地   (初中英语单词)
• management [´mænidʒmənt]   n.管理；处理；经营   (初中英语单词)
• barely [´beəli]   ad.公开地；仅仅   (初中英语单词)
• reflect [ri´flekt]   v.反射；反响；表达   (初中英语单词)
• variety [və´raiəti]   n.变化；多样(性)；种类   (初中英语单词)
• painful [´peinfəl]   a.痛(苦)的；费力的   (高中英语单词)
• consumer [kən´sju:mə]   n.消费者；用户   (高中英语单词)
• expand [ik´spænd]   vt.张开；膨胀；扩大   (高中英语单词)
• minority [mai´nɔriti]   n.少数(民族)；未成年   (高中英语单词)
• commodity [kə´mɔditi]   n.日用品；商品   (高中英语单词)
• commission [kə´miʃən]   n.委任(状) vt.委任   (高中英语单词)
• billion [´biljən]   num.万亿   (高中英语单词)
• roughly [´rʌfli]   ad.粗糙地；毛糙地   (高中英语单词)
• respective [ri´spektiv]   a.各自的，各个的   (英语四级单词)
• eventually [i´ventʃuəli]   ad.最后，终于   (英语四级单词)
• august [ɔ:´gʌst]   a.尊严的；威严的   (英语六级单词)
• allure [ə´ljuə, ə´lur]   vt.诱惑；吸引   (英语六级单词)
• holding [´həuldiŋ]   n.保持，固定，存储   (英语六级单词)