(Bloomberg News) Gold is poised to climb the most in two years as prospects for additional economic stimulus by governments from the U.S. to China stoke demand for the precious metal as a bet against inflation, a survey showed.
Bullion for immediate delivery may reach $1,800 an ounce by the year-end, extending gains this year to 15 percent, according to the median forecast in the Bloomberg survey of 15 traders and analysts at a conference in Hyderabad in South India on Aug. 25. That would be the most since a 30 percent surge in 2010, data compiled by Bloomberg show.
Today, however, gold declined for the first time in four days in New York as some investors sold the metal after prices rallied to a four-month high. Gold for December delivery fell 0.7 percent to $1,664.40 an ounce by 7:48 a.m. on the Comex in New York. Prices reached $1,679.30 yesterday, the highest since April 12.
Gold is set for a 12th year of gains as the European sovereign-debt crisis boosts haven demand amid speculation of further policy easing by central banks, including the U.S. Federal Reserve, which may be considering a third round of so- called quantitative easing, or QE3. Investment holdings have expanded to a record on demand for a hedge against inflation.
"The euro zone has been quiet of late, but that doesn't mean the problems have disappeared," said Jeffrey Rhodes, global head of precious metals at INTL FCStone Inc., who expects gold to rally to $1,975 by year-end. "The U.S. economy has been sluggish and there is a growing belief that there is going to be QE3 soon. This anticipation is driving the market."
Fed Chairman Ben S. Bernanke said last week there's "scope for further action" from the U.S. central bank. He is scheduled to speak later this week at the Fed's annual symposium in Jackson Hole, Wyoming. China's Premier Wen Jiabao has urged additional steps to support exports and help meet economic targets as evidence mounts the slowdown is deepening.
Gold for immediate delivery rose as much as 0.4 percent to $1,676.90 an ounce today, the highest since April 13, and was little changed at $1,670.60 an ounce at 4:42 p.m. in Mumbai. Prices gained 3.4 percent last week, the most since the week ended Jan. 27. Spot gold reached a record $1,921.15 on Sept. 6.
"Europe's financial situation is straining at the seams and with no fix forthcoming, demand for safe havens is likely to remain strong," said Bimal Das, director at ScotiaMocatta, the metals trading unit of Bank of Nova Scotia.
The European leaders are preparing for a critical month in the three-year-old crisis that will involve the formulation of a European Central Bank bond-buying plan, a progress report by Greece's international creditors and a looming German court decision on bailout funding on Sept. 12.
"More cash is coming into the market from investors," said Philip Klapwijk, the global head of metals analytics at Thomson Reuters GFMS Ltd. "We expect there to be QE3 by September and gold will move substantially higher. The ETF demand has picked up and will continue to grow as prices rise."