Gold prices could go up 12.5 per cent and touch $1,800 per ounce in the second half of 2012, according to the Thomson Reuters GFMS Gold Survey, released in Beijing on Tuesday. Improved investment sentiment for gold will help drive prices up, said the survey. Presently, gold is trading at $1,600.
However, the upside is expected to be capped by expectations of a surplus market in 2012, said Philip Klapwijk, global head of metals analytics at Thomson Reuters GFMS.
The Gold Survey noted concerns over the Euro zone debt crisis, which is likely to continue in 2012, with Spain emerging as the principal area of concern.
"All the factors that triggered high gold prices in 2011 are still present in 2012," Klapwijk noted. The faltering US economy is likely to push the Federal Reserve into more monetary loosening, which would boost investor demand.
Investors' sentiment for gold is currently low, due to global investors moving to the dollar as a safe asset.
In India, however, gold prices have risen in the past few months despite international prices coming down, as the rupee is depreciating, making its imports costlier. With GFMS projecting higher prices, gold prices in India are likely to go up further.
Monetary loosening in the US, coupled with expectations of stimulus in China, India and Brazil, is expected to increase demand for gold in the coming months.