Private banks 'will rush to buy gold'

The chief gold trader at HSBC in London has suggested that private banks are being drawn to the prospect of buying gold in a move which would push prices higher.

A large proportion of the current generation decided to abandon their gold holdings in the 1980s and 1990s in the quest to make bigger short-term gains elsewhere.

However, Jeremy Charles, who is also the chairman of the London Bullion Market Association (LBMA), has claimed that he expects them to return in their droves after realising the prudence of a gold investment.

Speaking at the LBMA annual conference in Kyoto, Japan, he said: "I think the institutional investors and private banks in particular will all be reconsidering their strategy. My belief is they are likely to want to own some gold again."

Delegates at the conference also stated in a poll that gold prices will raise steadily up to November 2009 at the very least - a view which is shared by Mario Innecco, from MF Global Ltd in London.

"Gold is an indication of how things are going and eventually it will burst out and go up to $1,000 an ounce quite easily,'' he said.

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