Gold rushes for 12th year of gains, record seen

Gold’s record-breaking rally of the last decade is set to extend into this year and next as monetary policy stays loose and central banks build reserves, a poll showed on Thursday.

Silver is expected to decline for a second year running after hefty price swings spooked investors last year.

The survey of 45 analysts carried out by Reuters in January predicted an average spot gold price of $1,765 an ounce in 2012, 14 per cent higher than last year’s average of $1,544. This was itself 26 per cent above 2010′s $1,228 an ounce.

The Federal Reserve’s pledge this week to keep USinterest rates at rock-bottom levels for a number of years and its hints of fresh monetary easing are set to fuel further gains in gold, keeping the opportunity cost of holding bullion low and the dollar in check.

“It takes out the major risk factor for most people investing in gold, which is of real interest rates going higher,” said Macquarie analyst Hayden Atkins. “That would be the major tipping point for gold, and it just seems to be getting pushed out and out.”

Several big banks, including UBS, Morgan Stanley and Societe Generale, forecast the average price would break above the $2,000 level, which would be well above last September’s record $1,920.30. Their predictions highlight the extreme nature of a rally that started in 2001 from an average level of $270.

But signs of strength in the US currency late last year have unsettled investors, while rising appetite for other assets such as stocks could make trading conditions turbulent.