GOLD may reach a record high above $2,000 an ounce in late 2012 or early 2013, but the precious metal is nearing the end of a decade-long run that has lifted prices by more than 600 per cent, metals consultancy GFMS said yesterday.
Gold has been a top-performing asset since 2001 as portfolio diversification, concerns over sovereign risk and rock-bottom interest rates helped lift prices from a low near $250 an ounce in 2001 to a peak above $1,920 in September 2011.
It is likely to surpass that level in the final quarter of 2012 or the first three months of next year, GFMS said, potentially breaking through the $2,000 an ounce level. “A combination of factors will ensure that sufficient demand from investors and to a lesser extent official sector institutions comes into the market for it to clear at higher levels,” the company said in the second update to its Gold Survey 2011.
However, a normalisation of the broader financial landscape in the next few years is likely to take some of the wind out of gold’s sails.
“The report does acknowledge that the gold market is nearing the closing stages of its decade-long bull run,” said GFMS.
For the first half, the company forecasts gold prices will average $1,640 an ounce, close to current levels. A rising dollar and increased risk aversion, which in recent months has pressured gold, could curb price gains in the short term.
In the second half, it sees prices at an average of $1,840 an ounce.
GFMS expects jewellery demand to soften by 3.1 per cent in the first six months of 2012 to 1,027 tonnes, in line with a 2.2 per cent decline in overall demand to 2,199 tonnes.
City A.M. Reporter