VINACHEM

Gold will probably rally to a recordabove $2,000 an ounce next year as central banks ramp upstimulus to sustain the recovery, according to Raymond Key,London-based global head of metals trading at Deutsche Bank AG.

“We’ll take out $2,000, we’ll go higher,” Key said in aninterview in Hong Kong, where he attended the London BullionMarket Association’s annual conference. “That’s on the viewthat they’ll continue to print money.”

Bullion is headed for a 12th annual gain on concern thatstimulus by governments and central banks around the world topromote recovery from the global recession and combat thefallout from Europe’s debt crisis will debase currencies andspur inflation. Holdings in gold-backed exchange-traded funds,or ETFs, expanded to the biggest ever last week.

“Gold out of all the metals will be the best performer,”Jeremy East, global head of metals trading and structuredinventory product at Standard Chartered Plc, said in a Nov. 12interview. “The biggest driver of gold will be the ETF.”

Gold for immediate delivery, which rose to a record$1,921.15 an ounce on Sept. 6, 2011, traded at $1,727.02 at 4:08p.m. in Singapore, 10 percent higher this year. The metaladvanced 70 percent from December 2008 through June 2011 as the Federal Reserve bought $2.3 trillion of debt in two rounds ofso-called quantitative easing.

‘Takes Time’

“We’re still working out the excesses that we’ve seen inthe past,” Jamie Sokalsky, chief executive officer of Toronto-based Barrick Gold Corp. the world’s largest producer, said ina Nov. 12 interview. “This takes time, and easy monetary policyis going to have to exist for some time.”

The Fed said Oct. 24 it will buy $40 billion of mortgagedebt a month and probably hold interest rates near zero until2015 to boost economic growth and cut the jobless rate. The Bank of Japan expanded an asset-purchase program on Oct. 30 for thesecond time in two months and the European Central Bank has saidit is ready to buy bonds of indebted nations.

Attendees at the two-day LBMA event, which ended yesterday,become less bullish about the prospects for bullion over thecourse of the conference. Gold will probably gain to $1,849 bySeptember, according to the average response in a survey ofdelegates yesterday. That’s down from a forecast for a gain to$1,914, according to a separate survey of delegates on Nov. 12.

Jobs Data

Gold slumped to a nine-week low of $1,672.75 on Nov. 5 asbetter-than-forecast U.S. jobs data strengthened the dollar. TheDollar Index, which measures the greenback against six majorcurrencies including the euro, has gained 1.1 percent this yearas Europe’s fiscal crisis weighed on the euro.

“The outlook’s pretty positive for gold but peopleshouldn’t expect too much, we’re dealing with a market that’sfundamentally long,” said Deutsche Bank’s Key, referring tobets on further gains. “The rally’s becoming more mature.”

Flows into ETFs may total 200 metric tons this year, from175 tons in 2011, Barclays Plc said in a Nov. 8 report. That’s4.6 percent of total physical supply of 4,323 tons this year,according to Bloomberg calculations based on Barclays’ figures.

Brazil, South Korea and Russia are among countries thatadded gold to their reserves this year, data from theInternational Monetary Fund show. Nations bought 254.2 tons inthe first half of 2012 and holdings are on pace to exceed the456 tons added in 2011, Ashish Bhatia, manager of governmentaffairs at the producer-funded World Gold Council, said Nov. 11.

“With central banks continuing to buy gold around theworld and with the macroeconomic environment which is stillthere, the demand should remain very strong,” said Barrick’sSokalsky. “We’re not going to see the reaction on the supplyside to make up for that in the industry.”