Gold is set for record highs this year amid sovereign risk fears, loose monetary policy and concerns over the outlook for the Euro, speakers at a precious metals conference led by ETF Securities have said last week.
Platinum and palladium are also recovering after their recent sharp price correction, although questions remain over the stability of investment holdings of the precious metals.
HSBC analyst, James Steel predicted that gold would break through its current record high at $1,248.95 an ounce in May in the third quarter of 2010. “If the issues that are affecting euro zone debt shift across the Atlantic that is when we would look for the dollar to weaken and for gold to (break higher),” he said.
Mr Steel said accommodative or loose U.S monetary policy was positive for gold because it helped to support economic growth and global commodities demand.
Concern over the outlook for the euro which has fallen nearly 15 percent against the dollar this year, is also fueling a rise in gold investment, particularly in Europe, Nicholas Brooks, head of research at ETF Securities said, “It seems across the board to be Europeans who are buying gold, whether it is coins or bars or ETFs,” he said. “The clear logic is that European investors are worried about the euro.”
“The concern is what happens to the euro in the next three to 10 years,” he added, stating that a lot of investors are looking at gold and commodities generally as an alternative.
“I don’t think they are selling all their euros and buying gold, but a lot of conservative investors who had never held any gold are now looking at gold.”
Strength in the dollar, usually a major drag on gold prices, is unlikely to impact the metal as long as the current crisis of confidence in the financial markets continues, Steel added.
