Spot gold prices jumped $2.50 straight after the AM Fix in London today, rising to $664.75 per ounce.

Against both Sterling and Euros, gold also moved higher towards last night's 3-week peak.

British investors wanting to buy or sell gold saw it trade up to £338 at lunchtime.

French and German investors found the mid-price at €498.40 per ounce.

"Our view is still very, very clear," says Paul Walker, executive director of the highly respected GFMS consultancy.

"The building blocks are there for higher prices in the medium term and we think we’ll see gold prices reach the $700 level."

Speaking on the Moneyweb Power Hour on Radio 2000 in South Africa, Walker went on:

"We would probably have expected the price to be testing the $700 level around about now – if not a little bit earlier.

"Over the last few years, we have seen the price running up at this time of the year."

It's now 12 months since gold's most dramatic spike in 26 years first began.

The peak above $720 per ounce coincided with frantic de-hedging by the major gold mining companies – plus heavy demand during the Akshaya Thrithiya festival in southern India.

(Click here for the Indian demand and de-hedging outlook in 2007...)

"I think [the upwards] trend will continue," says Yukuji Sonoda, precious metals analyst at Daiichi in Tokyo.

"$700 is possible by the end of June."

Reuters reports rumors that the Osaka and Tokyo stock markets are both planning to launch exchange-traded gold funds this year.

"Within this year, Japanese stock markets will take up ETF gold," reckons Sonoda. "Everything is very good on the demand side."

Gold futures for delivery in Feb. '08 closed at the Tocom today worth $672 per ounce, a 3-week high.

Japan's forthcoming gold ETFs, however, won't be encouraged by the problems now affecting India's new gold funds.

The Financial Express in Mumbai today reports that the UTI Mutual Fund has only sold around one-fifth of its target allocation so far.

That disappointment comes even after UTI extended its funding offer by four days.

UTI's gold ETF is due to list on India's National Stock Exchange (NSE) by April 10. But its poor performance ahead of trading may deter the other new gold ETFs also slated for 2007.

Benchmark's gold ETF is also likely to discourage new "paper gold" offers in India, the world's strongest physical market.

Benchmark's gold fund was the first of its kind to float in India. It listed on Monday.

But each unit of Benchmark's gold fund – with a face value of Rs 1,000 – traded below an average price of Rs 945 today.

(BullionVault warned back in Jan. that India's gold ETFs wouldn't suddenly drive gold prices higher. Click here to read that story now...)

"The gold ETF may not give return at par with the equity market," says Rajan Mehta, executive director at Benchmark.

"But this fund gives the investors an opportunity to diversify and stabilize their portfolio in the long run."

The same claims – of diversification and stability – drove the development of gold ETFs in the West, of course.

And just like StreetTracks GLD and LxyOr GBS, these new Indian trust funds only give investors the chance to own "paper gold" rather than the metal itself.

Standard annual charges on the gold ETFs traded in London, Paris and New York also run to 0.4% per year – more than 3 times the storage and insurance fees billed by BullionVault.

Unlike BullionVault, however, the gold ETFs do not give you direct, outright, ownership of physical gold bullion – allocated in your name alone.

To learn more about the advantages of owning market-approved investment gold bullion outright – and to claim a free gram of gold stored in Zurich today – simply click now...