Confident investors banking on gold

The price of gold hit new highs this month, breaking through the $1,050 p/oz mark as a renewed gold rush took hold. Investors are bullish in their outlook, with two fifths (40%) of clients of Barclays Stockbrokers, the UK's largest stockbroker, believing the price of gold will rise.

The investor research also revealed a fifth (20%) believe the price of gold will remain steady, with just under a third (30%) predicting the price will fall.

Barbara-Ann King, Head of Investments at Barclays Stockbrokers said: "Despite the price of gold dipping this week, the past nine months have seen the popularity of gold soar. The credit crisis triggered a flight to safety from investors and gold's perceived safety and lack of correlation with equities saw investors flock to it. From April this year the equity market rallies dulled gold's lustre slightly but this month has seen it's popularity pan back into focus as apparent weakness of the dollar and growing inflation concerns, driven by the substantial fiscal stimulus plans and monetary easing programmes, pushed the price up into new territory.

"Central governments around the world have already reacted by remarking that gold may become the reserve currency of choice over the dollar as its value drops compared to other safe havens. If the value of the dollar drops further there may be a reverse effect on the price of gold. While it is encouraging to see our clients looking bullish in their outlook for the price of gold it is worth all investors bearing in mind that commodities like gold and the products that provide investment exposure to them can be volatile."