LONDON, Jan 17: Average gold prices will rise for the fifth year in 2006 as inflation fears, dollar instability and geo-political tensions boost its allure and prompt funds to pump in more money, a Reuters poll showed on Tuesday.

The global poll of 28 analysts and senior traders arrived at an average gold price of $525 per troy ounce in 2006, up 18 per cent from $445.05 last year. The metal was seen gaining further to an average $550 in 2007.

Silver was expected to gather strength from gold’s rally, while platinum group metals (PGMs) were tipped to extend gains, with platinum rising 7.5 per cent to $962.50 in 2006.

Spot gold sprinted to a 25-year peak of $564 on Tuesday, up 9 per cent so far this year following gains of around 18 per cent in 2005.

Forecasts were spread widely, with the highest gold price at $618 and the lowest at $470.

The metal reached its record high of $850 in January 1980.

Gold’s run higher in 2006 would rest mainly on assumptions supply/demand and macro-economic factors would drive the market and lift the

metal’s appeal as a haven for investors.

Gold is more and more becoming an insurance policy against any type of disruptive risk, and most portfolio managers believe that gold is an asset which should not be missed, said Frederic Panizzutti, senior vice-president at Swiss-based MKS Finance.

Silver was expected to rise 18 per cent to an average of $8.63 an ounce in 2006 from $7.31 last year, before falling marginally to $8.50 in 2007, the poll showed.

Spot silver, which gained 30 per cent in 2005, jumped to a new 18-1/2-year high of $9.29 on Tuesday.

Palladium prices were forecast at $270 an ounce, compared with an average of $200.44 last year.

Palladium is gaining favour with speculators, jewellers and car makers alike — a lethal combination,” said Ross Norman, director of The Bullion Desk. com.—Reuters