The precious metal soared to a record high of $1609.51 an ounce earlier this week as investors fretted about the prospects of a debt crisis in the eurozone and US.
It has since fallen back to $1597.55.
The uncertainty over the global outlook and risk aversion could drive gold as high as $2000 over the next year. Robust demand for gold in India and China over the past year has been a positive factor, but fears about the falling purchasing power of paper money and the rising risk of eurozone defaults are now further fuelling demand for precious metals
However, in inflation-adjusted terms, the gold price is yet to beat its all-time high in 1980 of more than $US2,300 an ounce.
Analysts noted the emergence of the gold-vending machines, saying it could become a sign the gold market was overheated if these gimmicky devices start popping up, gold to this year nudge under $US2,000 an ounce and rise to $US2,200 an ounce within the next 18 months.
hedge funds and investors in gold futures had held a large net long position on gold for some time.
He said Chinese flocked to gold because there was little else they could do with their savings, given banks offered a negative real interest rate (the inflation rate subtracted from the nominal interest rate) and the government had warned property prices were going down.
The Chinese were worried about protecting their savings from inflation but as their financial system continued to be deregulated, investments would flow to more asset classes than just gold everywhere. For the latest updates PRESS CTR + D or visit Stock Market news Today
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