Investors turn to gold as prices surge

A recent surge in investor interest in gold is set to push prices of the precious metal to record highs, according to a recent survey.

The price of gold has now risen to $604 an ounce, the highest in 25 years, and the Gold Survey, carried out by precious metal consultants GFMS, suggests that the increases could be set to continue.

Within the next two years, the survey suggests, the price of gold could push past the record level of $850 an ounce, set in 1980.

"Levels safely over $600 are now in our sights and further hefty gains over the next year or two are quite possible," said Philip Klapwijk, GFMS chairman.

"In the right circumstances, the 1980 high of $850 could even be taken out."

Gold, like other commodities, is currently enjoying popularity with investors as an alternative investment to stocks, bonds and currency, and the success of gold investment is predicted to attract more interest from investors such as pension funds.

The report notes that increased global inflation, together with a predicted slowdown of the US economy and political instability in the Middle East, is only likely to increase investor interest in the precious metal.

Mr Klapwijk added that the recent trend was in sharp contrast to past attitudes to gold investment.

"Overall, the apparent 'anti-gold' sentiment within the official sector community that had grown during the 1990s seems to be moderating, if not fading away," he said.

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