Analysts Predict Gold Prices Reach New Records in Third Quarter

Speakers at a precious metals conference put together by ETF Securities believe that gold prices are set for even more record highs do to the current monetary policy and issues over the current status of the euro.

HSBC analyst James Steel expects gold prices to exceed the present high of $1,248.95 with in the third quarter of 2010.

"If the issues that are affecting euro zone debt shift across the Atlantic ... that is when we would look for the dollar to weaken and for gold to (break higher)," Steel said.

Steel will on to say the the current US monetary policy is good for gold with supporting global commodities demand. The US monetary policy has reduced the opportunity cost of holding non interest bearing gold.

The euro has lost 15 percentage points to the US dollar in 2010 which has also increased the demand for gold, says Nicholas Brooks, head of research at ETF Securities.

"It seems across the board to be Europeans who are buying gold, whether it is coins or bars or ETFs," Brooks said. "The clear logic is that European investors are worried about the euro.

"The concern is what happens to the euro in the next three to five to 10 years," he added. "A lot of investors (are) looking at gold and commodities generally as an alternative."

"I don't think they are selling all their euros and buying gold, but a lot of conservative investors, very large investors, who before had never held any gold are now looking at gold."

Steele continued to add that, as long as, there are concerns about the euro than the strength of the dollar which usually impacts gold prices will not have any effect.