Investment funds poised to enter the gold market in the first half of 2010 is likely to push gold prices to new records, according to the latest Gold Survey Update from leading international precious metals consultancy, GFMS.
According to the Gold Survey Update, investor demand will be driven by fears of a double-dip recession, continuing huge government deficits, very loose monetary policy and a belief that “…notable if not runaway inflation is set to return”.
The 40-page report predicts that gold prices will exceed US$1200 an ounce by the second quarter of 2010 – this compares with a 2009 average of US$972 (gold peaked at a record US$1218 in early December but has since fallen back).
“The incentives to invest in gold should therefore be powerful this year. Moreover, we sense that there is a large amount of money poised to enter the gold market in 2010”, said the report.
Commenting on the report, GFMS chairman Philip Klapwijk said that the consultancy does not believe that the gold price has peaked as its “base case is that the economic recovery will prove sluggish”.
“This suggests that there may be little or no tightening of fiscal and monetary policies this year in a number of the major economies, most pertinently for gold, including the United States. That raises serious questions about the creditworthiness of governments and the outlook for inflation further down the path.
“These are factors that are driving portfolio managers to look for further opportunities to enter the gold market.”
For more information visit www.gfms.co.uk