Gold would have to exceed $2,000 an ounce to be considered in a bubble, and the metal will gain this year on investment in exchange-traded funds and central-bank buying, Deutsche Bank AG said. Gold will “perform strongly” on investor demand and low real interest rates in the U.S., Michael Lewis, London-based head of commodities research at Deutsche Bank, said in a report today. A bubble may form because investors are buying gold as a hedge against both inflation and deflation, he said.
“Given these risks, we believe gold will continue to compete aggressively for investment capital,” Lewis said. “On our estimates, the gold price would need to move above $2,000 to represent a bubble.”
Bullion for immediate delivery climbed $6.43, or 0.5 percent, to $1,382.10 an ounce at 11:45 a.m. London time. Prices rose yesterday, ending a string of five declines, on concern that Europe’s sovereign-debt crisis may worsen. Gold for February delivery climbed 0.6 percent to $1,382.20 on the Comex in New York. (more)
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