Gold Price Set to Rally, Say Analysts

Given that gold has recently undergone a correction, followed by a decent consolidation and particularly as European sovereign debt concerns escalate once again, we feel the ingredients are in place for another impressive gold rally, UBS strategist Edel Tully wrote in a note.

Gold for December delivery on the CME Comex division of the New York Mercantile Exchange hit a record high $1,923.70 per ounce in early trading Tuesday and then retreated to $1,1,879.20 in early afternoon trading.

We remain more positive on gold than any other precious metal as financial market insecurity continues to draw safe haven interest, central banks continue to buy gold and the market enters a seasonal strong period for Indian demand, said Kevin Norrish of Barclays.

Part of that central bank buying has come recently from Turkey, where gold imports rose to 17.1 metric tons in August from 10.5 metric tons in July and 7.6 metric tons in August 2010.

Appetite has improved despite record gold prices with year-to-date gold imports reaching 50.92 metric tons compared to 42.5 metric tons for the full year in 2010, said Gayle Berry of Barclays.