SYDNEY - Central banks will be net buyers of gold this year as they diversify away from the US dollar, global commodities investment fund BlackRock said on Monday in comments that helped drive bullion to fresh record highs.

BlackRock is one of the world's largest fund managers, boasting a total $1,4- trillion under management across all asset classes. It is manager and adviser to the US Federal Reserve and its views can influence the direction of global markets.

Evy Hambro, who runs two of the world's largest commodities funds, BlackRock World Mining Fund and Gold & General Fund, gave an upbeat outlook for gold during a media briefing in Australia.

His forecast for net central-bank purchases of gold this year would, if met, mark the first year in two decades when the world's central banks bought more gold than they sold. They have been net sellers of gold each year since 1988.

"The most recent break-out in the gold price in US dollars has caused most gold prices to start trending higher at the same time," Hambro said, adding that investors were now looking for gold to rise in other commodities as well as US dollars.

"When you start to see the price rising in a range of different currencies, it is a clear sign of a very strong market to come," he added.

Spot gold stood at $1 123,70 as of 02:16 GMT after touching $1 126,30 per ounce, a record, compared with the notional New York close of $1 118,50, helped higher by Hambro's bullish outlook, according to financial broking group IG Markets.

The previous record was $1 122,85 marked on Nov. 12.

Bullion was also gaining on renewed appeal as a hedge against the US dollar's weakness and inflation risks.

In other currencies, gold has not reached new highs since early 2009. In Australian and Canadian dollars and the South African rand, it peaked in February.

But Hambro said investors were now "looking for price rises across all currencies" as central banks build up their gold holdings and global supplies tapered off.

"Gold's role is gathering a lot more attention in terms of risk diversification," he said.

Hambro also said that the high level of gold production in China, which has replaced South Africa as the world's biggest producer, was not sustainable, pressuring world supply.

China's gold production rose 13,49% in the first half of 2009 from a year earlier to 146,505 t, according to the Ministry of Industry and Information Technology.

Hambro also said US demand for commodities was starting to show signs of recovery. This, along with stronger Asian demand, set the stage for a prolonged bull market, he added.

Hambro said China's rapid rise would underpin the next bull market. China accounts for about 40 percent of demand in almost every commodity and more than half the demand in some commodities such as steel and copper during the second quarter of 2009.

"Obviously other countries as well [that are] in a similar position to China, such as India, Brazil and so on are also having another magnifying affect in terms of the commodity picture," Hambro said.