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Rising Eurozone government debt, ultra-low interest rates and geopolitical risks are expected to extend the gold price rally that began at the end of December 2011, a commodities analyst said.

Concerns about government debt in Eurozone countries such as Greece, Portugal, Spain and Italy, along with easing monetary policies by the European Central Bank to stimulate growth, have helped gold rise more than 10 percent this year, James Steel, chief commodities analyst for HSBC, wrote in a report entitled Gold Outlook -- Sharpening the bull's horns.

The attention the U.S. debt will increasingly receive during the 2012 presidential election could weaken the dollar, which traditionally correlates with a rise in gold prices, Steel wrote in the report, which was released Sunday.

Another factor supporting gold prices this year is the trend of emerging market central banks diversifying their reserves away from the U.S. dollar and toward gold, he wrote.

The shift in central banks' attitude toward bullion is perhaps the single most important bullish development in the gold market since the creation of gold ETFs; we expect this to continue, Steel wrote.

Another reason for a sustained growth in gold prices this year is volatility in energy and food prices. Steel's report notes that many of the world's largest oil producers are unstable countries, which causes turmoil in the financial markets. He also wrote that gold prices rose in 2008 and 2010 when the U.N. declared a global food crisis.

These facors will result in an average 2012 gold price of around $1,850, Steel wrote, with a range of $1,450 to $2,050 according to a report by James Steel, precious metals analyst with HSBC, with its average price around $1,850. The price of gold on the Comex was $1,720.60 an ounce in mid-morning trading.

Beyond this year, HSBC expects the average price of gold per ounce to be $1,800 in 2013 and $1,750 in 2014. The long-term price of gold is expected to be about $1,500 an ounce.

A gold rally, especially if the price of gold reaches over $2,000 an ounce, is expected to curtail the demand for jewelry, while a gold price of $1,500 an ounce or less will help stimulate demand, Steel mentioned. Furthermore, increased mining output along with an increased supply of scrap metal should also tame the gold rally over time, but likely won't reverse it.