Gold Prices Set for $1,000 Dollars in 2008: Industry Group
Gold prices could hit 1,000 dollars an ounce in 2008 after this week's record-breaking run that was fuelled by fierce investment demand, precious metals consultancy GFMS said Thursday.
"Investor appetite for gold at the moment seems undimmed and this should push gold higher over the year," GFMS chairman Philip Klapwijk said as the independent research group published its annual Gold Survey.
"Predicting the top is never easy but we always thought the 900-dollar barrier could easily fall quite soon and then we have to start viewing 1,000 dollars as a clear possibility for later this year."
Gold prices jumped to a record high 914.30 dollars earlier this week on the back of factors that included the struggling dollar and geopolitical concerns in Iran and Pakistan.
That upwards trend is set to continue, according to GFMS.
"GFMS expect the surge in investment to be driven by those factors that fuelled the boom witnessed in the final four months of 2007," the consultancy said.
Those factors included "a weak dollar, record oil prices and their inflationary consequences, the US sub-prime (home loan) crisis and its threat to (economic) growth in the United States and perhaps elsewhere, and lastly geopolitical tensions."
Soaring demand for jewellery production in China and India has also supported bumper gains.
The weak dollar encourages demand for gold because it makes the precious metal cheaper for buyers using stronger currencies.
Economic and geopolitical turmoil, meanwhile, attracts investors to gold because the metal is regarded as a safe-haven. It also guards against rising inflation caused largely by soaring crude oil prices.
Gold is trading at elevated levels, despite slipping back under 900 dollars per ounce in recent days. On the London Bullion Market on Thursday, gold was at 884.14 dollars.
The yellow metal had struck its historic high on Monday, after surging past 900 dollars for the first ever time in New York at the end of last week.
Even without geopolitical support, gold could still strike more record peaks, according to the GFMS report.
"We can easily see higher gold prices without fireworks in the Middle East or Pakistan, though any political drama there or elsewhere is highly likely to rally the price yet further," Klapwijk added.
GFMS forecasts that gold will trade at an average of 840 dollars in the first half of 2008, with further increases thereafter.
Klapwijk conceded that gold would probably retreat in the near term following its recent blistering gains -- but would aim higher in the second half.
"This temporary fall back explains why our forecast average for the first half at 840 dollars could seem a bit low in light of current levels," he said.
"But that's still up almost 30 percent year-on-year and with this period of consolidation out the way ... that's when we should see the convincing drive towards 1,000 dollars an ounce."