Dubai Gold (DG) futures prices are likely to move upwards on the Dubai Gold and Commodities Exchange (DGCX) following the increasing investment demand as safe haven status of gold and hedge against inflation.

Along with the price rise, volumes are also expected to go up. The DG contract has been one of the top two volume pushers on the DGCX for more than a week.

The key factors are the rising investment demand, developments in China and volatility in the currency market. DG futures contract on DGCX showed intraday high of $1,260 an ounce and was trading at $1,254 at 5:15pm yesterday. Gold price may rise further to surpass the last record of $1,264.90 per ounce on June 21 to touch $1,270 as bullish momentum is strong, forecast analysts.

Pradeep Unni, senior financial analyst at Richcomm Global Services, DMCC, said: "As long as gold price is above $1,250 an ounce, fresh highs in gold futures can be expected as several factors such as investment demand, central banks' buying and funds flow from the realty sector, are supporting the price."

Relying on technical trading cues, investors are active for short-term gains, while institutions and major investors prefer to add to their gold holdings for long-term perspective.

"Gold prices have the potential to set record highs again this week. Last week was the third consecutive week of record prices for gold. While financial markets have stabilised over the past two weeks compared to the high levels of volatility seen in May and early June, there remains a great deal of investor anxiousness. Demand for gold remains firm while there continues to be a reluctance to sell substantial amounts of gold investments," said CPM Group in its weekly report on DGCX.

Analysts also indicate that accelerating inflation in China and India in addition to high volatile currency markets will push the prices further up. The high interest position of 1300 lots on Friday indicates trading interest in the DG contract.

"The long-term trend is up. Gold prices have the potential to set record highs again this week. Demand for gold remains firm while there continues to be a reluctance to sell substantial amounts of gold investments. Short-term investors have been active in the gold market leading to a larger open interest. The previous week market gave opportunities to both buyers and sellers making the DGCX to report a larger open interest in gold contracts," said Nuaym Khalid, senior financial analyst at CFB Global.

After rising continuously for four weeks, the DG futures contract on DGCX closed the week with 0.20 per cent loss to $1,255.50 an ounce.

"Though I am currently long on gold, I expect a sharp correction could happen any day. The weekly range for gold would be a resistance at the previously created high of $1,265 and a support at $1,228," said Khalid.

Gold prices added 14 per cent this year so far indicating continuous rise for tenth successive year.

"However, the high spot gold prices put the physical market sales under pressure. Few countries including Saudi Arabia are increasing their gold reserves," said Unni.