Gold at Record Highs

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Gold may extend its record to as high as $2,500 an ounce in the next year if sovereign debt concerns escalate, Citigroup Inc. said.

The metal climbed to a record $1,921.15 an ounce on Sept. 6 as concerns about debt crises and slowing economic growth boosted demand for a protection of wealth. The metal could “briefly spike” to between $2,000 and $2,500 in the next 12 months and will likely stay above an average $1,200 a year in the long-term, Citigroup predicts.

Bullion is headed for an 11th straight annual gain, the longest winning streak since at least 1920 in London. The metal is up 27 percent this year as investors seek to diversify away from equities and some currencies. Investors’ assets in exchange-traded products climbed to a record 2,216.8 metric tons last month, more than the holdings of all except four central banks, data compiled by Bloomberg show.

“The threat to the global financial structure during the credit crisis has led to high net-worth individuals seeing gold as an insurance against such instability in future,” a team of analysts including London-based Jon Bergtheil wrote today in a report. “This insurance role will likely continue to assist demand while concerns remain about sovereign risk and the longer-term issue of whether the dollar will still be the world’s reserve-currency in 5-10 years time.”

Gold for immediate delivery traded at $1,806.60 an ounce by 10:37 a.m. in London. The metal will average $1,650 next year, the bank said. – Bloomberg