The price of gold will rise to $1,450 a troy ounce in the next year, according to a poll of bankers, producers and analysts attending the London Bullion Market Association conference in Berlin, the biggest gathering of the precious metal’s industry.
If realised, that would mark a 12.5 per cent increase from current record prices just above $1,300 an ounce.
On Tuesday, spot gold traded at $1,289.50.
The delegates of the LBMA conference have a strong track record of predicting moves in the gold price, although their forecasts have consistently undershot actual prices in recent years. Last year they forecast gold would be trading at $1,182.50 at the start of this year’s conference.
“It’s very hard to be pessimistic about the gold price in the short term – at worst, you’re neutral,” Kevin Crisp, managing director at Mitsubishi, the Japanese trading house, and chairman of the LBMA, told the Financial Times.
Mr Crisp’s comments summarised a resoundingly bullish atmosphere at the LBMA conference. Some delegates believe gold prices could surge even further, with some analysts and bankers predicting prices above $1,500 an ounce in the coming months as investors stock up on gold in response to uncertainty about the state of the global economy and the effectiveness of monetary policy.
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“The degree of uncertainty that is out there at the moment ... has justified a move into gold,” said John Reade, senior vice-president at Paulson, the hedge fund which made millions during the financial crisis and now is buying bullion.
The majority of delegates at the LBMA conference cited the potential of a double-dip recession and further weakness of the US dollar as the main drivers of gold prices over the next year. Some also cited fears about surging inflation on the back of further monetary easing by the US Federal Reserve.
Gold prices have surged nearly 20 per cent so far this year amid heavy investor buying, particularly during May and June. The rally was further helped by signs that central banks, led by Russia and several Asia-based monetary authorities, would this year be net buyers of gold after two decades of net selling, and by bullish comments from leading gold miners. AngloGold Ashanti said it planned to wind up its forward sales, a bet that high prices are here to stay.
The bullish forecast for gold prices bodes well for the share price of the world’s largest bullion miners, including Barrick Gold, AngloGold and Newmont Mining.
The LBMA delegates forecast silver would be trading at $24 an ounce in 12 months’ time, up from the current 30-year high of $21.61. They said that platinum prices would be at $1,857 an ounce, up from the current level of $1,614, and palladium at $702 an ounce, up from $545 currently.
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