Tuesday, 10th October 2006 (5078 views)

The price of gold could reach a new high later in 2007 as the US dollar continues to weaken, claims a leading investment team.

London-based Baker Steel Capital Managers believes that gold prices are set to climb during the next 12 months, especially as continuing economic growth in China and India leads to stronger demand for gold jewellery products, reports Bloomberg.

Last year, India accounted for 23 per cent of demand for gold and the country's ongoing development is likely to see this trend as the world's top buyer of gold continue for the foreseeable future.

Trevor Steel, managing partner and investment manager at Baker Steel Capital, believes that the price of bullion may total around $700 an ounce by December, with next year's prices rising to more than $850 during 2007 – breaking the record-high set in January 1980.

"Gold will rise because of the structural weakness in the dollar," explained Mr Steel.

He added that it is likely that such falls in the value of US currency will also be accompanied by escalating oil prices and therefore more investors will consider investing in gold, especially as an inflation hedge.

Baker Steel Capital has enjoyed a 20.2 per cent return this year on its Genus Dynamic Gold Fund, considerably above the 8.2 per cent rise of the Standard & Poor's 500 Index.

 

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