Analyst tips $US2,000/oz gold price

The gold price could hit $US2,000 an ounce by the end of the year, some analysts say. However, in inflation-adjusted terms, the gold price is yet to beat its all-time high in 1980 of more than $US2,300 an ounce. Empire Economics chief economics Clifford Bennett says the gold market is not yet overheated and he expects the price will eventually break through the 31-year-old record. He tipped gold to this year nudge under $US2,000 an ounce and rise to $US2,200 an ounce within the next 18 months. "There is risk in the second half of the year of a bit of a panic spike, if you like, as everyone thinks there isn't enough to go around and starts to hoard," Mr Bennett told AAP on Thursday. "That's when you'll really see gold take off towards $US2,000 an ounce."

Mr Bennett said the global investment portfolio was currently underweight on gold. He said there was strong demand for the precious metal in the populous and increasingly wealthy nations of India and China for industrial and cultural purposes. "India and China will continue to stockpile gold," Mr Bennett said. "Gold has certainly come back as a respected reserve form of wealth. "There's been some US buying on the back of fears of European sovereign debt, but I don't think that market is long yet." An analyst, who did not want to be named, said hedge funds and investors in gold futures had held a large net long position on gold for some time. He said Chinese flocked to gold because there was little else they could do with their savings, given banks offered a negative real interest rate (the inflation rate subtracted from the nominal interest rate) and the government had warned property prices were going down.

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