Gold could hit record highs above $1,600: GFMS
Gold could hit record highs above $1,600 per ounce later this year, driven by low interest rates and stubborn concerns over the eurozone debt crisis, metals consultancy GFMS forecast on Thursday.
"GFMS are expecting that towards the summer prices could start to move materially higher, with gold possibly breaking through $1,500 (per ounce) at that stage," GFMS said in its latest report.
"They also see an approach to or even a breach of $1,600 by late 2011/early 2012 as quite feasible.
"Much of this is expected to be driven by still low interest rates, poor returns elsewhere (and) the elevated level of government debts in Europe, the United States and Japan," the report said.
The consultancy added that gold was also lifted by "nagging concerns over quantitative easing in the United States and its ramifications for the dollar."
The US Federal Reserve has been creating new money to pump into the US economy to bolster a hesitant recovery but in doing so, it risks debasing the value of the dollar.
Gold hit a record 1,431.25 dollars on December 7, boosted by its safe-haven status in times of economic uncertainty as investors fretted over the eurozone debt crisis.
"GFMS' report highlights the critical role that investment demand played last year in bringing about a series of record price highs and the 26-percent jump in the annual average," the consultancy added.
"These elevated levels of interest were in turn ascribed to a raft of factors, most notable of which initially were European sovereign debt concerns and, arguably, rising concern about fiat currencies in general."
The metal is also regarded by investors as a safe store of value amid fears over rising inflation.
"Inflation may seem a quite distant threat today but there's many an investor out there who sees real longer term danger in current US policy and the lack of political will or consensus to start tackling deficits," GFMS chairman Philip Klapwijk said.
In late afternoon Thursday trade on the London Bullion Market, gold rose to $1,381.35 an ounce from $1,378.75 late on Wednesday.
© 2011 AFP