Analysts: Gold price set to increase

Average gold prices are set to jump by ten per cent this year and rise further in 2008, according to a group of analysts.

News agency Reuters polled 33 analysts and traders over the past month and came to a median figure of $670 per troy ounce of gold, up from an average of $612.10 in 2006.

As well as this, the price of gold is set to rise to an average of $681 next year, which is four per cent higher than was predicted in a similar poll in January.

"We believe the medium-term environment remains constructive for the gold price outlook," said Deutsche Bank's Michael Lewis.

"A further depreciation of the dollar, low real US interest rates, the possibility of more skittish equity markets ahead as well as strong fabrication demand suggest to us that the recent correction in the gold price will be short-lived."

Precious metals trader Donald W Doyle, Jr, of Blanchard and Company, reiterated the view, maintaining that "the forces that have driven commodity prices higher in the last couple of years remain largely in place".