After gaining ten percent last year, gold prices are well-positioned to increase 21 percent this year, extending the bull run to a 12 consecutive year period.
As investors hoard the precious metal, central banks are increasing their reserves for the first time in many years.
The rally started in 2001 and is currently the longest running since 1920 within London.
Several global events have led demand to increase and the trend is expected to continue through the end of the year.
The Bloomberg Link Precious Metals Conference was held in New York yesterday and fourteen attendees responded to a survey issued at the event.
Based on the average of their responses, prices for golden bullion may increase to $1,897 per ounce by Dec.
31 in New York.
At the end of last year, the price stood at $1,566.
80 per ounce.
The European debt crisis, slowed economic growth in China, and low interest rates around the globe are increasing demand.
For three consecutive years, central banks have been net purchasers of the precious metal.
According to data from the World Gold Council, this is the longest net buying trend for the institutions since 1973.
DundeeWealth Inc.
chief economist Martin Murenbeeld believes that insecurity regarding whether the euro will exist in coming years is responsible for the recent golden purchases by central banks.
Mr.
Murenbeeld stated that in a global shift, "gold has become an investment, an asset class [according to Bloomberg].
" He believes that in the future, it will be amassed.
On Tuesday, exchange-traded fund holdings backed by this metal hit a record 2,410.
2 metric tons, according to Bloomberg data.
This year on the New York Comex, futures have already increased 6.
5 percent, while the 24-commodity S&P GSCI Spot Index increased 9.
5 percent and the MSCI All-Country World Index of equities appreciated 11 percent.
To spur growth in the U.
S.
economy, the Federal Reserve has kept interest rates near zero percent and engaged in two rounds of quantitative easing.
This has increased demand for the precious metal as a hedge against a declining dollar and inflation.
Greece recently announced the largest restructuring of sovereign debt in history and Ireland and Portugal have also sought bailouts.
Gold offers "the ultimate downside protection" during situations like this, said Rachel Benepe, co-manager of the First Eagle Gold Fund [according to Bloomberg].
Ms.
Benepe stated that uncertainty regarding the future and how to deal with it has led many investors to purchase the precious metal.
Some are driven by the belief that central banks will provide additional monetary stimulus to drive economic growth.
At the conference yesterday, Francisco Blanch, with Bank of America Merrill Lynch Global Research, predicted that the gold price will reach $2,000 per ounce this year amidst additional Federal Reserve monetary stimulus of $800 billion.
By late in the day, the national economic assessment was increased by the U.
S.
central bank, making additional stimulus less likely.
Prices of the precious metal declined up to 2.
2 percent.
Futures for April delivery fell 0.
3 percent.
While the dollar has increased two percent this month, gold prices have dropped 2.
4 percent, remaining below their Sept.
6 record of $1,923.
70 per ounce.
During recent months, the growth rate in holdings by private and institutional investors has slowed, said Tiberius Asset Management AG founder Christoph Eibl.
He recommend that investors "be opportunistic" but realize that the precious metal "is not a messiah.
" Pento Portfolio Strategies President Michael Pento expressed a different view at the conference, saying that purchasing gold is "the only way to protect wealth...
because it is probably the only money that is relatively indestructible.
"