April 13, 2006	Thursday	Rabi-ul-Awwal 14, 1427

LONDON, April 12: Gold prices, which this week hit the highest level for over 25 years, could break the record of 850 dollars per ounce within two years on massive investment demand, metals consultancy GFMS said on Wednesday.

Levels safely over 600 dollars are now in our sights and further hefty gains over the next year or two are quite possible, said Philip Klapwijk, chairman of the independent metals research group.

In the right circumstances, the 1980 high of 850 dollars could even be taken out, he added in the group’s annual survey on gold, which had struck the historic high point in January 1980.

In trading on the London Bullion Market on Tuesday, gold prices jumped above 600.0 dollars per ounce for the first time since December 1980, reaching a high point of 604.30 dollars.

The consultancy feels this bull run would be overwhelmingly driven by investment and the report details what factors sustained this in 2005 and should continue to do so moving forward, the GFMS added.

Investors are flocking to buy gold in the face of high crude prices, which are near 70.0 dollars per barrel on concerns over possible supply disruptions in major oil exporter Iran.

The precious metal is regarded as a good store of value in times of rising inflation and geo-political uncertainty, such as the escalating Iranian nuclear crisis.

Also on Wednesday, copper and zinc prices soared to record high points, after nickel and silver struck multi-year peaks earlier this week, owing to falling stockpiles and runaway demand from economic powerhouse China.

The GFMS survey continued: For 2006, the chief drivers of investment were expected to remain the high probability of a sharp slowdown in US economic growth and a slide in the dollar.

A weaker US unit makes dollar-denominated commodities cheaper for buyers using other currencies.

Other supportive factors were thought to include greater inflationary pressures and political tensions in the Middle East, the report added.

Rampant demand from investors and speculators alike has seen gold jump by a hefty 40.0 percent since January 1, 2005.

Klapwijk said: Investors often look for a reason to jump in and this arrived at end-August in the form of Hurricane Katrina and a rally in the energy complex.

Other key triggers the Survey highlighted for 2005 were investors’ belief that central banks were becoming friendlier to gold and a phase of marked yen weakness which boosted investment in Japan, the GFMS added.

Despite the recent substantial increase in gold prices, the GFMS discovered that jewellery demand — a key sector of the market — rose by almost 100 tonnes last year.—AFP