By Glenys Sim Dec. 3 (Bloomberg) -- Gold may reach a peak of $1,300 an ounce next year as more investors purchase bullion to preserve wealth against a declining dollar, UBS AG said. Central bank purchases will also support bullion prices, Dominic Schnider, head of commodities research at the bank’s Wealth Management Research, told reporters today in Singapore. “We note the tendency that could see central banks ending up net buyers of gold, after years as net sellers,” he said. “This has changed the supply-demand balance considerably.” Bullion for immediate delivery has risen 39 percent this year and reached a record $1,226.55 an ounce today. Purchases by central banks in India, Mauritius and Sri Lanka from the International Monetary Fund have helped fueled the gains. Gold prices will average $1,150 an ounce in 2010, UBS said. Prices averaged $962.39 an ounce this year. Schnider did not rule out the potential for gold to move “easily” beyond $1,500 an ounce on a combination of accelerating inflation, a weakening dollar, increasing cost of production and rising demand. At such levels, the price of gold compared with other assets would be “mispriced,” he said. “The recent developments have been exponential in nature and exponential developments tend not to persist,” said Schnider. “I cannot forecast overshoots.” To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

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