“Gold prices may rise by $100 an ounce by the end of this year and breach the $700 level on renewed interest from investors, Paul Walker, chief executive officer of London-based research company GFMS Ltd, said.
The precious metal could trade between $580 and $720 an ounce in the next six months as investors seek to diversify from stocks and bonds, Walker said at a gold conference today. Gold for immediate delivery traded at $600.10 at 6:30 p.m. Seoul time.
The price of the metal may reach “$700-plus” before the end of the year, and may even rise in 2007 to the 1980 high of $850 an ounce, Walker said.
Reasons for gold rising included a weak U.S. dollar, inflation concerns, global political tensions and more money being invested in gold, he said.
Gold for immediate delivery reached an all-time high of $850 an ounce in 1980 on heightened global tension and concern over inflation. It touched a 26-year high of $730.40 on May 12 this year and has fallen 18 percent since on lower oil prices.
“The real price of gold is still relatively low compared to the historical high,” Walker said. “The weight of money going into gold in various forms is still there.”
Weak Dollar
A weak U.S. dollar might boost the appeal of gold as an alternative investment. Gold, sold in dollars, generally moves in the opposite direction of the U.S. currency. The New York Board of Trade’s dollar index has fallen six percent against a basket of six major currencies this year.”
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