HOUSTON: Gold prices may rise above $1,300 per troy ounce by 2011 on record demand from investors worried about inflation, currencies and sovereign debt, a survey by UK-based consultancy GFMS has said. Gold prices are averaging at $1,113 this year, up from $972 in 2009, and are forecast to touch $1,150 in the next several months, the report said. The demand sparked by investors worried about inflation and currencies should continue in 2010 and 2011 to make up for the steep fall in jewellery demand and scrap sales, says the report. But a sharp correction is in store further ahead when inflation fails to run away and the US dollar escapes a dollar-crisis as some predict, it said. The GFMS Chairman, Mr Philip Klapwijk, said in an interview to Bloomberg that he expects “The current strength in gold prices to moderate,” noting that (investment) demand will begin to wane as real interest rates rise and the safe haven propertie s of gold become less relevant under a more stable economic environment. “We are entering the final stages of a bull market. But that doesn’t rule out the potential for some fairly fancy price gains before it reaches a peak in prices. We are actually pretty bullish still in at least the next 6-12 months. By the end of this ye ar, we believe prices will be near the $1,300 mark,” he said. However, he said the current trend in gold demand is not a reflection of a healthy underlying market as the demand for jewellery, the traditional mainstay of the gold market, has reduced to just 43 per cent. Jewellery demand was off by 25 per cent (at 1,111 tonnes) over the past year, according to the GFMS survey. Such demand is normally the mainstay of the gold market as it usually represents about 70 per cent of total global gold demand. — PTI

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