GOLD will continue to perform well against most asset classes into the final quarter of 2009, Investec Asset Management said today. This follows the gold price's smashing through its previous record high of $1,032/oz to trade within a few dollars of the $1,050/oz mark within the past two days. "Moreover, the price of gold is still just over half of its prior peak in 'real' terms, even after the rally of the past eight years," said Investec Global Gold Fund portfolio manager Daniel Sacks, adding that the firm continued to see "much more upside than downside risk to bullion". Included in his reasons for believing in the precious metal's upside is that the economic case for owning gold remained strong. Sacks said notwithstanding the growing chorus of bullish sentiment, debate remains strong as to how real the perceived global economic recovery really is. "With the fear of a significant financial crisis seemingly waning, debate is now turning again to how the recovery will play out. In almost all but a global soft-landing scenario, gold is likely to rally further. With a global recovery unlikely to be smooth, the two main risks to most asset values are inflation and US dollar weakness — both of which are decisively gold positive," Sacks said. In addition, the Indian gold-buying season is upon us with Indian demand set to climb in the next three months following Dipawali festival later this month. What is more, Investec Asset Management sees safe haven buying as a reinforcing factor for the gold price. "Further reinforcing our positive outlook for gold is continued safe-haven buying as an alternative currency, with gold the only currency whose production is going down, not up in double digits. There is also little chance of a supply response to high gold prices. Mine production is on a declining trend," said Sacks. Gold was last quoted at $1,041.47 from its last JSE close of $1,042.15.

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