Hedge funds sharply reduced bullish bets on gold, cutting positioning to the lowest level in nearly four months after the metal suffered its steepest weekly decline in more than a decade, according to a report by Bloomberg.

Money managers and other large speculators slashed net-long positions by 23% to 93,438 contracts in the week ended 3 February, according to US government data. That marked the weakest level of bullish positioning since October.

The pullback followed a sudden reversal in precious metals markets after gold and silver surged to repeated record highs in January. The rally came to an abrupt halt at the end of the month, with prices falling sharply as gains were judged to be overly rapid and stretched.

Gold recorded its biggest one-day drop since 2013 on 30 January and has since struggled to regain stability, with volatility remaining elevated as investors reassess positioning after the sell-off.