Demand may also be supported by record-low interest rates from the U.S. to Europe because gold generally earns investors returns only through price gains. The Fed has pledged to keep rates at "exceptionally low levels" at least through late 2014. The European Central Bank, as well as flooding markets with more than 1 trillion euros ($1.23 trillion), has kept its refinancing rate at 1 percent since December.
Cover Losses
Some investors sold gold to cover losses across commodities and equities, said Jeffrey Sica, the Morristown, New Jersey- based president of SICA Wealth Management who helps oversee $1 billion of assets. About $6 trillion was erased from the value of global equities since the end of March, and the S&P GSCI commodities gauge slid 14 percent as Europe's crisis deepened and growth slowed in China, the biggest consumer of everything from coal to soybeans to copper.
"Gold is still going to $2,000 an ounce this year," said Michael Widmer, an analyst at Bank of America Merrill Lynch in London, who predicts a fourth-quarter average of $1,875. "It's just going to take a little bit longer to get there."