Gold Prices to Hold Steady at $1,006/oz-Westpac

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"Demand for gold has shifted to the investor. . ."

The price of gold is likely to hold at around $1,006/oz by the end of 2010, moving slightly higher to $1,030/oz by 2011, said Australian financial services company Westpac senior economist Huw McKay on Monday.

"We do not see immense upside in gold but it is certainly there," McKay said at the Paydirt Gold conference in Perth.

He said that although the prices for gold would remain high, the demand for other commodities, such as base metals, would also increase.

The demand for commodities such as copper, aluminum, lead and zinc would be driven by industrial demand, which, in turn, would be driven by the recovery in the global economy. The recovery of the automobile industry would also be driving the copper demand.

McKay attributed the gold price pressures to two main factors: the change in demand for jewelry, from two-thirds of world gold consumption in 2007, to around 40% currently, and the expansion in exchange-traded products, which had grown from accounting for 7% of total gold consumption in 2007, to 19%.

"This is a dramatic trend movement move and it is here to stay," he added.

The trend was first seen in 2008/9 when investors moved from government bonds to the "safe haven" of gold and other commodities.

"Demand for gold has shifted to the investor, with very strong fundamental trends coming together to fuel investor appetite for things they can see, touch, hold and put in a warehouse. Gold certainty meets that criteria."

Gold is trading at around $1,105/oz on Monday.

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