UPDATE 2-Uncertainty to keep gold rising in 2011-LBMA

Published 09/27/2010, 07:35 AM
Updated 09/27/2010, 07:40 AM
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* LBMA poll has bullish f/cast as spot price hits $1,300/oz

* Spot gold has averaged $1,176/oz YTD

(Adds comment, details, refreshes gold price)

By Jan Harvey and Amanda Cooper

BERLIN, Sept 27 (Reuters) - As investor uncertainty over the outlook for global markets drives gold to record highs, delegates polled at the London Bullion Market Association annual conference see no end to the rally any time soon.

Using electronic communications devices in the conference hall, delegates submitted their vote on where the price of gold was likely to be in September next year, giving a forecast of $1,406 an ounce, with 32 percent expecting around $1,500.

In the last 12 months, the gold price has risen by 30 percent against a backdrop of volatile currencies, stocks and bonds and doubt over the resilience of the global economy.

With investors looking to protect against potential inflation, or deflation, analysts have also said that gold is a viable investment for both scenarios.

"Are you going to sell gold strongly in the current environment and the answer is 'no'. Are you going to buy gold? The answer is 'maybe' or 'yes'. So the balance is definitely to the upside," said LBMA chairman Kevin Crisp in an interview on the sidelines of the conference.

Barrick gold, the world's number one miner of the precious metal, told Reuters at the conference that gold prices could "easily" outperform recent record highs to rise above $1,500 an ounce in the next year.

"From what we're hearing, there are still significant new buyers coming into the market," Jamie Sokalsky, the company's chief financial officer, said.

At the LBMA's event in Edinburgh last year, at which the association conducted a formal price poll on the last day of the conference, delegates forecast a gold price of $1,181.00 by this September.

"In comparative terms, gold is still a relatively small market compared to the other asset markets out there and it doesn't take a massive number of people to be uncertain about the direction of economic growth and the stability of financial systems and to decide to diversify into hard assets," Crisp said.

"Gold, I think, has got to be a beneficiary of that," he said.

GOLD NUDGES $1,300

Earlier on Monday, spot gold hit a record $1,300 per ounce -- a key psychological marker -- as an initially weaker dollar and speculation that the U.S. Federal Reserve might further resort to quantitative easing, to give the economy a leg up, supported sentiment.

The Fed said last week it was prepared to take action to help the recovery and lift inflation. Many analysts expect it to resume buying longer-term government debt later in the year to drive borrowing costs down further.

Spot gold has averaged $1,176 an ounce for the year to date and a Reuters poll in July forecast a mean average of $1,195 in 2010 and $1,233 in 2011.

One of the major forces feeding investor demand has been the proliferation of exchange-traded funds backed by physical metal held in vaults. This has made investing in gold a reality for retail investors for the first time.

"More people can get access to the gold market these days," Crisp said.

"If you look at Germany, there's been a huge surge in sales of coins and small bars ... you've got ETFs and that means people can buy gold if they want and silver and platinum and palladium and that's a big change," he said.

By 1122 GMT, bullion was bid at $1,298.65 an ounce, up slightly from $1,295.60 late in New York on Friday. (Additional reporting by Veronica Brown in London; Editing by Anthony Barker)

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