The shift in New York futures and options came as speculators increased their bearish wagers to the highest since the U.S. government data begins in 2006. Long holdings declined for a fourth week.

Gold fell to the lowest since 2010 last week, and futures in New York are poised for the biggest monthly loss in two years. Prices are plunging amid mounting speculation that U.S. interest rates will climb this year, curbing the appeal of bullion because it doesn’t pay interest like competing assets. At the same time, China bought less of the metal than analysts were expecting, and the dollar is strengthening.

“You’re starting to see some real fear in the gold market for the first time,” said Eric Crittenden, the chief investment officer at Phoenix-based Longboard Asset Management LLC, who manages $304 million. The fund has been short since 2013 and increased those positions in March. “I’m not going to be the least bit surprised if this turns into something very significant and we get a lot lower prices.”

Futures fell 4.1 percent last week to $1,086 an ounce on the Comex, after touching $1,073.70, the lowest since February 2010. Most-active prices were at $1,095.80 on Monday after rising 0.9 percent. The MSCI All-Country World Index of equities declined 2.1 percent last week as the Bloomberg Dollar Spot Index gained 0.1 percent for the fifth straight advance.

Gold Bears

Speculators held a net-short position of 11,345 contracts in the week ended July 21, according to U.S. Commodity Futures Trading Commission data published three days later. Bearish wagers climbed 12 percent to 121,238.

The price rout has been a part of a broader slump in commodities, as everything from oil to copper to sugar tumbled, signaling inflation should remain subdued. The Bloomberg Commodity Index retreated 4.4 percent last week, reaching a 13- year low.

Global assets in exchange-traded funds backed by gold dropped 1.1 percent last week, as of Thursday, to 1,554.4 metric tons. That was set for the biggest weekly decline since March, and the holdings are the smallest since 2009.

It’s been a painful two years for gold bulls, who by the end of 2012 had accumulated a record position in ETPs. Since then, more than $84 billion has been erased from the funds’ value. Futures dropped 44 percent since reaching an all-time high of $1,923.70 in September 2011.

Profit Threat

Lower prices could curb production. With the metal trading below $1,100, profit at one-third of mining companies is under threat, according to Bloomberg Intelligence. Barclays Plc analysts said in a July 14 report that the metal has historically traded at least a third above average production costs, implying support around $1,000.

“As a long-term investor, pricing continues to be attractive at these levels, but you’re going to need to have a strong stomach,” said Michael Cuggino, the president of Permanent Portfolio Family of Funds Inc. in San Francisco, which manages $4.6 billion, with about 20 percent allocated to gold. “These prices are attractive given the cost to mine gold and how much it’s come off its high from years ago.”

Goldman Sachs Group Inc.’s Jeffrey Currie says the suffering for bulls isn’t over because prices could fall below $1,000 for the first time since 2009.

Morgan Stanley

Macquarie Group Ltd. on Friday said that gold has lost its appeal as a commodity and as an alternative to currencies. The bank cut its outlook for prices in 2016 by 15 percent to $1,163. Morgan Stanley said last week that the metal could reach $800, under a worst-case scenario that would involve higher U.S. interest rates, another tumble in China’s stock market and sales of reserves by central banks.

“If you go back to the peak, there have been different plateaus where people thought, ‘OK, it’s going to consolidate and rebound,’” said Paul Christopher, the St. Louis-based head of international strategy and co-head of real-asset strategy for Wells Fargo Investment Institute, which oversees $1.7 trillion. “Well, it didn’t. It was just waiting for another leg lower, and I’m afraid this is another one of those episodes.”