NEW YORK, Feb 5 (Reuters) – The price of gold will average $900 an ounce with a test of the historic $1,000 level possible this year based on strong investment buying amid a weak dollar, inflation concerns and safe-haven demand, a Citigroup metals analyst said.
John Hill, director, metals research, at Citi in San Francisco, told clients in a note dated Monday that the ongoing credit crisis and the threat of a U.S. recession and a global slowdown could further boost gold.
“Should inflation accelerate while (interest) rates are locked under economic weakness, gold could spike near past inflation-adjusted highs,” Hill said.
“We view this as an extremely hospitable macro environment and believe the ongoing investment-driven demand phase will continue for gold, particularly as the broader investor base is not yet fully involved,” he added. . .
