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Michael Babad
RTGAM

Gold forecast to remain high

Gold prices continued to climb today, reaching a record near $1,300 (U.S.) an ounce, and some analysts believe they will remain high for years to come. "Fears of runaway inflation or a dollar collapse, which underpin some of the most bullish forecasts for gold, remain exaggerated," Capital Economics in London said in a report today. "Nonetheless, prices should continue to be supported by strong demand for a safe haven from other potential economic and financial shocks, such as a U.S.-China trade war and the breakup of the [euro zone].

Believing inflation will remain low, Capital Economics said any fading demand for gold as a hedge against inflation could be replaced by heightened demand for a safe haven. The report projected prices will remain high for several years, dipping slightly to $1,200 an ounce by the end of this year but rallying further next year to at least $1,400 "as new shocks hit the global economy and financial system."

As Globe and Mail reporter Brian Milner notes in today's Report on Business, investors are rushing to the safety of gold, and other assets, on mounting concern that the U.S. economy isn't about to come back to life any time soon. Fears of U.S. fiscal excess push investors towards safetySoros sounds warning on gold rally