Gold prices continued to surge on Wednesday, hitting a fresh record close to $1,050 a troy ounce as investors bet that trading momentum would push the precious metal still higher.
Barclays Capital said gold prices, which have risen 10.3 per cent since the end of August, could run to as high as $1,500 an ounce if previous technical trading patterns were extrapolated.
“We believe gold has a significant upside potential into 2010,” the bank said, adding current prices “were off the charts”. In spite of a 40 per cent rally in gold prices since Lehman Brothers collapsed a year ago, few traders appeared to be taking profits or betting on a price fall.
“The selling is not materialising,” said James Steel, a precious metal analyst at HSBC in New York, echoing a view held by other analysts and traders.
Jon Spall, gold specialist at Barclays Capital in London, added: “No one is saying ‘this is enough, let’s sell’.”
The reluctance to sell is in spite of mounting worries about a sharp drop in jewellery demand in India – the world’s largest buyer of gold – Turkey, United Arab Emirates and Italy.
Jim Rogers, the Singapore-based investor who has been one of the biggest bulls during this decade’s commodities rally, said that he would refrain from buying gold at a record high, but added that he was not betting against a drop in prices.
He told Reuters: “I cannot say what will happen to gold tomorrow. But if you ask me whether gold will go up in the long term... would say yes.”