London bank expects gold prices to rise 'in the medium term'

Major international bank Standard Chartered has confirmed today (September 8th) that it expects gold prices to "trend higher over the medium term".

The London-based institution has expressed concerns over the immediate future of the gold price as the dollar strengthens and it continues to be buffeted by the price of crude oil.

However, it has predicted that prices will broadly remain steady for the remainder of 2008 and the first half of 2009, before pushing higher towards the end of next year.

Metals analyst Dan Smith explained that the bank still views investing in gold as a sound strategy.

He said: "There will be some more bullish influences. Investors continue to fret about the possibility of a crisis in the US banking sector, helping to boost gold from a safe haven perspective.

"Also, inflation remains a significant problem in a number of countries - boosting gold as a store of value.

"We believe much of the material is being held for long-term investment purposes, although clearly there is a more speculative short-term component as well."

Mr Smith also added that he expected the gold price to retest the $1,000 per ounce mark, a barrier it last broke through in March this year.

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