Those who are skeptical about buying gold considering its high prices may have to wait forever as the yellow metal is set to cross the $1,300 per ounce mark in the second half of 2010.
Consumers, especially in India, have been waiting for gold prices to come down to make purchases. But, according to market analysts, gold prices are set to cross the $1,300 level in the coming months.
Currently, gold prices on the New York Mercantile Exchange (NYMEX) are ruling at $1192.10 per ounce.
World's leading precious metals consultancy GFMS said the growth expected, especially in value terms, of investment demand will probably be sufficient to drive prices above the $1,300 mark during the second half.
GFMS expects investment demand to be volatile in the second half of 2010, but remain on a positive trend overall due to ongoing concerns on the long-run value of major currencies.
Demand from the fabrication industry, which is dominated by jewellery, is expected to recover some of the ground lost in 2009, although the year-on-year growth is expected to slow in the second half of 2010 due to higher gold prices.
Even though progress (in demand) is dependent on yet higher inflows from investors, economic conditions still seem to favour such growth in investment over the balance of this year. And indeed, they probably will continue to do so well into 2011.
There was still scope for downward movement in gold prices over the next few months, if investment demand faltered temporarily.
In the absence of a major change in the economic outlook, GFMS feels that gold would now be well-supported at prices between $1,150 and $1,200 per ounce.
On the availability of gold in the global market, the consultancy expected an increase in supply in 2010 due to the International Monetary Fund (IMF) programme boosting overall official gold sales and further growth in mine production, which together would offset a marginal drop in global scrap supply.
The precious metal hit an all-time high of $1 265,30/oz on June 21, but was trading below $1 200/oz on Wednesday.
However, Sydney-based Resource Capital Research was moderately bearish on the gold outlook and said that the recent records were driven by the words crisis and banks associated with the European debt crisis.
Take away the crisis mentality, and gold looked precarious, it said.