Gold could rally above $ 1,300 an ounce this year, in which successive all-time highs as uncertainty about the economic recovery and a sovereign debt crisis stoke interest in investments, according to a report by the industry closely monitored released Tuesday.
The demand for investment in gold should benefit from the threat of inflation as the central bank interest rates reduced to the bone to double-dip Battle recession and high unemployment, metal respected consultancy GFMS Ltd. said in its Gold Survey 2010 Update.
“I think we could easily see gold spike well above $ 1,300 for the year … further gains in 2011 are far from out of the question,” said Philip Klapwijk, GFMS chairman.
“The United States has so far managed to side-step the sovereign debt crisis. But that may change in future and that would undermine the dollar and boost gold,” he said.
In April, Klapwijk told Reuters there was a good chance for gold at $ 1,300 this year, hit by investor led gains. At that time, however, he said the metal was near the final phase of its 10-year bull market run and record investment buying Could not sustainable.
On Tuesday, spot gold hit an all-time high at $ 1,267.20 an ounce. Bullion has quintupled since 2000 when it was trading at about $ 250 per ounce. Year to date, it was about 15 percent.
And December gold futures on the COMEX division of NYMEX scaled an all-time peak of $ 1.273 per 11:02 CET (1502 GMT) Tuesday. The previous record of $ 1,268.50 was set up 6.21 on the continuation chart.
INVESTMENT IN THE first half of 2010
World Gold investments, including implied net investment, bar hoarding, official and other currencies, fell nearly 40 percent to 778 tonnes in the first half of this year of 1,260 tonnes over the same period last year, when investment demand a record high hit, GFMS said.
The London-based company said that demand reduction in the first half was due to liquidation in the U.S. futures market and the falling price of gold at the beginning of the year.
GFMS, however, expected strong currents investors in gold for the second half of this year, driven by high prices and favorable economic conditions for investment bullion.
World investment was estimated at 1313 tons increase from 633 tonnes in the second half of 2009.
Jewellery demand was expected to rise 3.5 percent to 1819 tons, recovering from a lackluster year in 2009.
In April, GFMS said that investors in search of wealth to protect the global economic crisis in 2009 bought more than gold jewelry consumers for the first time since the gold rally was back in 1980.
On the supply side, the total mine production is estimated at 2.4 per cent increase to 2637 tons.
Old gold scrap supply is expected to increase to an all-time high 1753 tons in 2010, exceeding a previous record 1672 tons in 2009.
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