A leading metals analyst has raised his forecasts for the future price of several precious metals, including gold.
James Steel, of HSBC, will have interested people investing in gold when he confirmed that he is pushing his long-term price forecast up to $700 an ounce from his original prediction of $600 an ounce.
The significant rise is being attributed to a number of bullish factors working together, namely the projected ongoing weakness of the US dollar, inflation and a decline in output.
In a note to clients, Mr. Steel remarked: "We expect gold to be supported by rising inflationary pressures and a weak US dollar, but weak jewelry sales and higher levels of scrap will free up metal for investment demand."
Mr. Steel explained that revising his forecast - which adds credence to the concept of buying gold now when prices have cooled slightly - was a means of reflecting the industry's higher cost of production.
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