THE price of gold could reach $US1450 an ounce by the end of the year after surging to a record high early yesterday, an economist says.
The precious metal settled at $US1248.70 an ounce on the Comex division of the New York Mercantile Exchange, up $US18.20, and nudged $US1248 in spot trade in Sydney yesterday.
Clifford Bennett, chief economist at independent research firm Herston Economics, said gold could fetch between $US1350 and $US1450 per ounce by the end of the year.
Mr Bennett said the most bullish predictions of a $US3000 per ounce gold price could be a reality by 2015. He was a strong believer in gold's future, not for the usual reasons "based on fear" or it being a hedge against inflation.
"I know a lot of people back gold because they are worried about Europe, but I think Europe is fine. There are not going to be any defaults," Mr Bennett said.
"Manufacturing is strong in Europe and the US, and China is still a juggernaut.
"I'm bullish on gold because the two most populous countries in the world, China and India, also happen to be the two fastest growing countries in the world.
"They are getting wealthier at a faster rate than anyone else and are the two countries that culturally value gold more than any other society.
"The demand for gold, just on increased wealth in China and India alone, is going to be tremendous, and when you add to that strong manufacturing, strong industrial production, from all three major continents in the second half of this year . . . demand could outstrip supply."
Mr Bennett said China and India amassed gold "almost as a saving", while central banks were buying up gold reserves as they were wary of the US dollar.
CMC Markets foreign exchange dealer Tim Waterer said the sharp rise in the gold spot price in local trade had encouraged buying of the commodity-linked Australian dollar.
