Gold Prices 'to reach $1,300 per oz' by 2011

BMO Capital Markets has predicted that Gold Prices could reach $1,300 per ounce within the next 18 months, the Daily Telegraph reports.

The yellow metal finally pushed into four-figure territory today (September 8th) for the first time since February as investors continued to value its safe-haven status.

Now the capital markets division of BMO, which is the fourth-largest bank in Canada, has explained that the surge of Gold Buying will continue well into 2011.

"The metal will likely be energized again late in 2010 amid a weakening greenback and rising inflation concerns, as the US economic recovery takes root and as post-recession growth becomes entrenched," said its analysts in a report quoted by the newspaper.

"At that time, risk taking should accelerate and with it BMO Research expects a weaker dollar as capital increasingly moves away from the safety of the treasury market."

Those comments were strongly corroborated last week by Ng Cheng Thye, a director with Singapore-based Standard Merchant Bank, who also provided an optimistic long-term assessment of gold prices.

Gold is often bought as a hedge against inflation and Mr. Thye explained in an interview with Bloomberg that this trend will continue to emerge in the coming months.

"You need some bullish factors, not so much on the dollar but also on interest rates," he told the news provider.

"When the recovery is in full steam, people will be concerned about inflation, then gold can penetrate to a higher level."

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