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Gold Will Keep Advancing After Reaching Record, Survey Shows

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Nicholas Larkin
Bloomberg News
Thursday, October 8, 2009

Oct. 8 (Bloomberg) — Gold, trading at a record for a third consecutive day, will keep rising as a weaker dollar and concern that inflation will accelerate bolsters investor demand, a survey showed.

Bullion will advance to $1,150 an ounce by the end of the year, 9 percent higher than today, according to the median estimate in a survey of six analysts and investors at a commodities conference in London yesterday. Estimates ranged from $1,300 to $1,050. Gold already rose 20 percent this year and is heading for a ninth consecutive annual gain, the best performance since at least 1948.

The dollar slumped 6.5 percent against a basket of six major currencies this year, as the U.S. kept interest rates near zero and government debt surged on spending aimed at ending the worst economic slump since the 1930s. U.S. consumer prices will expand 1 percent this quarter and 1.8 percent in each of the following two quarters, according to the median estimate of 49 economists surveyed by Bloomberg.

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“The dollar weakening is the main driver at the moment,” Francisco Blanch, head of commodity research at Bank of America Merrill Lynch, said in an interview. The “next step” in the rally “will be driven by commodity markets. It will be a commodity supercycle story and inflation story.”

Gold is often bought as a hedge against a weaker dollar and higher inflation. Bullion holdings in exchange-traded funds have jumped to records. The biggest, the SPDR Gold Trust, has passed Switzerland as the world’s sixth-largest gold holding.

Full story here.

This article was posted: Thursday, October 8, 2009 at 9:22 am





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