Gold to touch $1,200/ounce by Q2

Gold to touch $1,200/ounce by Q2

Gold prices are likely to reach record highs, as investments in the precious metal is expected to rise in the first half of 2010, says a report today.

Gold is projected to cost more than $1,200 per ounce by the second quarter this year, according to metals consultancy firm GFMS.

A growing weight of investment money is poised to enter the market in the first half of 2010 and is likely to push gold prices to fresh records," the consultancy said in a report today.

The agency has predicted that gold prices would exceed $1,200 an ounce by the second quarter of 2010. "This compares with the 2009 average of $972. Gold peaked at a record USD 1,218 in early December but has since fallen back," it added.

Going by the report, investor demand would be fuelled by fears of a double dip recession, continuing huge government deficits and very loose monetary policy, among others.

The incentives to invest in gold should therefore be powerful this year...we sense that there is a large amount of money poised to enter the gold market in 2010", GFMS said.

Noting that the global recovery would be sluggish, GFMS chairman Philip Klapwijk said this in turn suggests that there may be little or no tightening of fiscal and monetary policies this year in many major economies, including the US.

That raises serious questions about the creditworthiness of governments and the outlook for inflation. These factors are driving portfolio managers to look for further opportunities to enter gold market," Klapwijk added.

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