Investing in gold on the rise as 'risk aversion is high'

An analyst with the second-biggest bank in Germany expressed his belief on Friday (January 16th) that people are continuing to buy gold for its safe-haven qualities, Reuters reports.

A number of commentators have predicted that the coming months will be tough for gold as inflation - which is bullish for the yellow metal - makes way for a period of deflation.

However, Eugen Weinberg, from Commerzbank, has explained that as the banking sector's woes continue, people are investing in gold to provide a minimal-risk store of wealth.

He told the news provider: "Risk aversion is high. People are looking at gold right now as a real hedge against everything - an alternative asset.

"The more problems we see in the banking sector and the financial sector in general, the more attractive gold as a hedge against such risk will be."

Mr. Weinberg's comments come after major Canadian bank CIBC World Markets upped its gold price forecasts for 2009 and 2010 last week.

Metals analysts Barry Cooper, Brian Quast and Cosmos Chin confirmed in a report quoted by Mineweb that its estimate for the two years are $950 per ounce and $1,050 per ounce respectively.

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