Gold price to reach $1700/oz

With gold prices hovering around the $1500-per-ounce-mark, experts believe that a surge in prices in the next six months is likely, with prices reckoned to increase by about 15 per cent to reach $1700/oz by the end of the year.
Despite the fact that the price of the yellow metal has gone up by just 5.5 per cent since the beginning of this year, M.R. Raghu, Senior Vice-President-Research at Kuwait Financial Centre (Markaz), believes that “gold will have another good year in 2011.”
“In my assessment, it is likely to end at $1700 per ounce levels, implying a 20 per cent increase for 2011. It did about 30 per cent for 2010,” he told Emirates 24|7.
With a lacklustre economic recovery in the US and concerns over uncertainty in the European debt markets giving support, gold prices are likely to break previous records, say analysts. The precious metal has immensely gained in popularity as a safe haven investment, and is expected to continue its upward trajectory.
Experts at Standard Bank too are believers in the gold story, and see prices moving up. “We believe gold will continue to push higher in 2011. Our core view on gold is driven not only by our observations in the physical market but also by continued growth in global liquidity, driven not so much by the Fed anymore, but increasingly by government borrowing,” said Walter de Wet, a commodity analyst at the bank.
Experts maintain that the performance of the yellow metal is less volatile as compared to other commodities, giving it more scope to appreciate.
“Unlike silver or oil, gold has a risk-controlled performance so far with low volatility as it has a wider audience (retail, institutional, hedge funds and government treasury). As articulated before, gold will continue its march so long as US economic recovery is hazy, Europe is in doldrums and the inflation monster in Asia is uncontained,” explains Ragu.
In its first quarter report of 2011, The World Gold Council said that gold demand grew 11 per cent compared with the first quarter of 2010, as the average gold price for the quarter rose 25 per cent year-on-year. It’s an as-expected quarter, said the council.
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