Gold will rise to $1,200 an ounce by yearend as the dollar extends a slump, increasing demand for the metal as a store of value, according to researcher CPM Group. “There will be increased economic volatilities, albeit not a major disruption, in the coming five to ten years,” Douglas Horn, a New York-based analyst at CPM, said in an interview at a conference in Singapore. “Investors perceive gold as an asset class to hedge against these volatilities.” President Barack Obama has increased U.S. marketable debt to a record as he borrows to spur growth in the biggest economy, raising concern that the increasing money supply will debase the dollar and stoke inflation. Gold prices reached an all-time high of $1,070.80 an ounce yesterday as the greenback declined to the lowest since Aug. 2008 against a basket of six major currencies. Gold for immediate delivery climbed $2.72 to $1,065.13 an ounce at 2:10 p.m. in Singapore, while December-delivery gold on the Comex division of the New York Mercantile Exchange stood at $1,065.50 an ounce after rising 80 cents. The metal has risen 21 percent this year, heading for a ninth straight annual gain. Bullion will account for 1 to 2 percent to total assets in global investment portfolios, compared with less than 1 percent currently, as flows into commodity products increase, Horn said. Commodity-linked products attracted $2.63 billion in August, at least twice the amount recorded for any August, according to Barclays Capital. Exchange-traded funds products attracted $1.74 billion, according to the bank. “In the past years, we used to see retail investors coming to the market to buy gold but now we’re seeing a large scale of institutional investors participating in the gold market. That’s a significant change,” said Horn. To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net

Source