18/07/07: Bullion 'could reach $850' next year

Bullion continues to rise, bolstered by a falling dollar.

The price of gold was up by $2.20 to $668.10 per ounce by midday today (July 18th), the Financial Times reports.

The greenback fell further against the euro and fears about subprime issues affecting the economy also prompted investors to run to the yellow metal as a safe bet.

Some analysts are predicting that gold will hit record highs next year, building on those seen in 2006.

"Investors are likely to push up the price to $850 an ounce in 2008," said Philip Klapwijk of London-based consultancy GFMS.

Mark O'Byrne of Gold & Silver Investments said that "gold's strength overnight and this morning seems to be primarily due to the dollar's fall", MarketWatch reports.

He added: "Worries about subprime loans were reinforced after Bear Stearns said that two of its hedge funds that have invested in these loans were 'almost worthless'".

The dollar reached a 26-year low against the British pound today.