Gold could hike to $2,000 by year-end: Thomson Reuters

Gold prices could fall below $1,550, returning to record highs by the end of this year, Thomson Reuters GFMS, a top precious metals consultancy, said this morning.

Together with its outlook for the precious metal, the consultancy published its Gold Survey 2012, the 46th edition of the report, at events held in London, Johannesburg and Toronto.

Philip Klapwijk, global head of metals analytics at Thomson Reuters GFMS said the market would easily see last September’s record high [a closing high of $1,900.23 on September 5] being taken out.

“A push on towards $2,000 is definitely on the cards before the year is out, although a clear breach of that mark is arguably a more likely event for the first half of next year,” said Klapwijk.

He added that GFMS expects any softening in the price to prove temporary as “acute” fears over Eurozone sovereign debt, focused on Spain, the region’s fourth largest economy.

Some key areas of demand, such as acquisition from central banks, will remain in place, but the company said it does not expect official sector purchases. Last year, those rose to their highest since the mid 1960s, to increase higher this year in ounce terms.

The company painted a weaker picture in terms of jewellery buying, the main source of gold demand. Gold jewellery manufacturing fell 2% in 2011 to 1,973 metric tonnes (2,175 tons), GFMS data showed, as offtake from major consumer India fell nearly 3% to 761 tonnes.

Yet, Thomson Reuters GFMS believes the prospects for gold prices this year remain bright.

“Investors continue to be concerned about the outlook for inflation, with governments in general showing little appetite to tighten monetary policy significantly,” said Klapwijk.

“Furthermore, growing price acceptance by consumers will help lift jewellery demand, while generating only a muted response from scrap. Together, these will help raise the support level in the gold market and provide a firm platform for investors to take gold higher,” he explained.

Gold was trading at around $1,660 an ounce in London on Wednesday morning.

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