GFMS Sees Gold Hitting $1600 in 2011

Posted by Adam Sharp - Wednesday, April 13th, 2011

GFMS has released their widely-followed Gold Survey 2011. The firm says prospects for gold "remain bright", and they see the metal rising another 13% by year-end.

Factors that will drive prices higher include continued loose monetary policy in the U.S., global unrest, and increased buying by Central Banks, according to the survey.

Quotes and analysis via the WSJ (emphasis added):

In its Gold Survey 2011, GFMS said fears the market may be approaching a turning point are "still premature," with growing evidence that buyers are adjusting to higher prices.

"Indeed, we would expect the next waves of investor buying to take gold to above $1,500/oz, and then to the $1,600/oz mark before the end of 2011", GMFS said.

Furthermore we expect investment in gold this year to be supported by the probable spreading of the government debt crisis from Europe to the U.S. and Japan, especially in light of the huge budget deficits the latter two countries will record in 2011 and the lack of concrete measures they are taking to rein these in

More from Bloomberg Businessweek:

Demand for physical gold bars rose 66 percent last year to a record 880.5 tons, led by purchases from China. The country’s central bank has raised rates four times since early October to combat accelerating prices. China’s consumer-price inflation reached 4.9 percent in February, above the government’s target of 4 percent.

Mine supply expanded by 3.8 percent to 2,688.9 tons, led by the biggest producer, China, GFMS said. Production will rise 4 percent this year, while scrap supply will have a “fair increase,” pushing total supply up 6 percent, Klapwijk said in the presentation.

Miners paid an average $557 an ounce to extract gold, a 17 percent increase from 2009, according to the report. De-hedging by producers this year will be limited, Klapwijk said.

Live gold chart:

View the full GC00 chart at Wikinvest

 

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