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Jan 13, 2010
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Gold facing new record highs in 2010: GFMS consultancy

By
AFP
Published
Jan 13, 2010

© 2010 AFP - Gold prices will likely hit new historic peaks this year, thanks to a wave of investment money that will pour into the market, consultancy GFMS predicted on Wednesday 13 January.



A growing weight of investment money is poised to enter the gold market in the first half of 2010 and is likely to push gold prices to fresh records," the London-based group said in an update to its annual survey.

Gold, whose two main drivers are jewellery and investment buyers, had smashed a series of records last year on the back of inflationary fears and increasing moves by central banks to diversify assets away from the dollar.

The glamorous precious metal, which is traditionally viewed as a safe-haven investment, hit a record pinnacle of 1,226.56 dollars an ounce on December 3.

GFMS forecast Wednesday 13 January that investment demand for gold would be propelled this year by fears of a so-called "double dip" recession -- which would see the battered world economy plunged back into another downturn.

"GFMS says investor demand will be driven by fears of a double dip recession, continuing huge government deficits, very loose monetary policy and a belief that notable, if not runaway, inflation is set to return," it said.

The metal wins support from fears about higher inflation because gold is widely regarded by investors as a safe store of value.

GFMS added that South Africa has dropped down the league table of top gold producing nations.

Australia has leapfrogged South Africa to become the second biggest gold producer after China, according to the consultancy.

South Africa, once the largest gold producer in the world, is now the third biggest after its gold production sank by five percent last year.

Global gold production, meanwhile, increased by six percent to a six-year high point last year.

GFMS also said that jewellery demand fell 23 percent last year, while investment demand rocketed by 105 percent.

"World investment demand exceeds jewellery demand for first time in 30 years," it noted.

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