Gold prices are on track to hit $2,000 an ounce by early next year, but this could mark the end of the more-than-a-decade-long boom.
Metals consultancy GFMS reckons that investors will continue to flock to gold as a safe haven in coming months as the eurozone debt crisis looks to be far from over and there could be more monetary easing globally if America's recovery falters - last week's lacklustre jobs data were a taste of that.
Gold has struggled somewhat this year as demand for gold bars, jewellery and coins in key physical markets like China and India softened, and investors on financial markets also showed less appetite for bullion. But while GFMS admits gold prices could drop to $1,550 an ounce in the next month or two, the consultancy believes this to be temporary as the eurozone crisis and uncertain global recovery continue to haunt us.
GMFS chairman Philip Klapwijk said: "We could easily see last September's record high being taken out, and a push on towards $2,000 is definitely on the cards before the year is out, although a clear breach of that mark is arguably a more likely event for the first half of next year."
He added, however, that "it may be that 2013 marks the high water mark for the market."
"It depends [on whether] we see some resolution in Europe, enough to really take some of the sting out of that issue ... an end to stimulus measures in the United States ... and the prospect of a normalisation of monetary policy."
The eurozone debt crisis sprang back into life this week, when fears over the impact of drastic austerity measures on Spain and Italy drove up the countries' borrowing costs and sparked panic buying in stock markets, with Italian shares plunging 5% on Tuesday. Spot gold is heading for its largest weekly gain in six weeks, and is trading at around $1,674 an ounce at the moment.
Gold is expected to trade in a range of $1,530-1,920 an ounce this year, with an average price of $1,731 an ounce, according ot GFMS. The top end is just below last year's all-time high of $1,920.30 an ounce, reached last September.
"What we're seeing ... is a postponement of the next leg higher in prices," Klapwijk told Reuters before the launch of GFMS's Gold 2012 report. "Lying behind this is what we have seen over the first three months of this year, which is a certain amount of investor fatigue, [and] certain physical markets such as India and China not punching quite as hard as they did last year."
Last year the Chinese snapped up gold jewellery at record levels while demand in India fell by less than 3%. In western countries, cash-strapped consumers bought less jewellery and were instead persuaded to part with unwanted pieces as gold prices rocketed. The report charted a major rise in jewellery scrap in the west.