Panaji, September 05: Gold may go as high as USD 1,100 an ounce at least by early next year on the back of a weak dollar, but weak physical off-take from India could cap its upside, a senior analyst from Standard Bank said on Saturday.
“We expect the dollar to weaken against the euro in the next 6-12 months due to high inflation and a rising trade deficit,” said Walter De Wet, head of commodity research at Standard Bank.
“Inflation may rise as central banks have expanded their balance sheet by pumping in so much money into the system.”
De Wet was speaking to reporters on the sidelines of a weekend gold conference in Goa in western India.
Gold generally moves inversely to the dollar as the two compete for funds. Gold also turns more attractive when investors see inflation rising.
De Wet said India’s jewellery demand would pick up, but under current conditions it would be difficult to reach the levels seen two to three years ago.
World Gold Council figures show India imported 126.7 tonnes of gold in the first six months of 2009, down 55 percent from 282.3 tonnes a year earlier.
–Agencies