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GFMS: Gold price to hit record high in June

A leading precious metals consultancy has claimed today (January 15th) that gold prices will reach a record high in June on the back of strong investment demand.

In a new report entitled 'Gold Survey 2008 - update 2', GFMS predicts that the first half of 2009 will be characterised by risk aversion and people buying gold as a store of wealth.

Chairperson Philip Klapwijk explained that demand has been high for some time but has been masked by mass fund redemptions as investors freed up cash to cover losses and meet margin calls.

He explained in a statement: "If it hadn't been for this fund selling, we'd be easily back over $1,000 by now and as soon as it quietens down, I'm sure a strong rally is going to emerge."

Mr. Klapwijk added that it is impossible to ignore the impact of the "extraordinary monetary and fiscal policies" devised by the US and he would not rule out a "dollar bust".

As a result, the consultancy believes that the gold price will hit an all-time high midway through the year, eclipsing the previous record of $1,030 per ounce, which was recorded last March.

This view was strongly corroborated recently by Nick Barisheff, president of Canadian firm Bullion Management Group, who noted that gold held its value better than any other asset last year.

"This trend will continue in 2009 as more investors will continue to seek a safe haven from the financial crisis that started in 2008," he told MSNBC.

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