LONDON, Oct 1 (Reuters) - The gold price will set a new
record high next year as the dollar tumbles and inflation is
fuelled by government deficits and loose monetary policy around
the world, Deutsche Bank (DBKGn.DE: Quote, Profile, Research) said on Thursday.

Gold will move above $1,100 an ounce during 2010, above the
record high of $1,030.80 an ounce hit in March 2008, and the
dollar versus the euro will hit $1.60, a level last breached in
July 2008. [USD/]

"We are positioning for fresh highs in the gold price," the
German bank said in a note, adding its gold price forecast for
2010 had been revised up more than 30 percent. [GOL/]

"We expect this will be driven by a resumption in dollar
weakness as well as an increase in inflation volatility, which
has historically been beneficial to gold prices."

A lower dollar makes commodities cheaper for users of other
currencies, while gold is used as a hedge against inflation,
which erodes wealth.

Deutsche said central banks have been net sellers of gold
since 1988, but it expected them to become net buyers.

"Despite the prospect of IMF gold sales, we expect lower
European central banks sales and emerging market central bank
diversification," it said. [ID:nN18272627] [ID:nSP482136]

Also boosting gold will be "a more rigorous enforcement of
position limits" by the U.S. Commodity Futures Trading
Commission, which will enhance the appeal of owning physically
backed exchange traded commodity funds (ETFs).

"Investor holdings in physically backed gold ETFs are in
excess of 1,700 tonnes," the bank said. "This compares with
Chinese central bank holdings of 1,054 tonnes."

Deutsche has also moved to a more bullish outlook for
platinum and palladium -- used to make autocatalysts.

"We expect investment demand combined with a rebound in
platinum jewellery demand in China and strong emerging market
auto sales will offset weaker autocats demand in the developed
markets," it said.

"With only a weak recovery in primary supply we expect this
will lead to a deficit market in platinum over the next two
years and a declining surplus market in palladium over the same
period."

The bank has also revised up forecasts for prices of
industrial metals such as aluminium used in transport and
packaging, and copper used in power and construction.

"Global apparent demand remains very strong for metals,
supported by considerable re-stocking in China," it said.

"We expect more moderate re-stocking from the advanced
economies over the next quarter, which should lend support to
the complex even as Chinese import growth decelerates."

Following is a table of Deutsche's precious and industrial
metal price forecasts.

2009 2010 2011 2012 2013
Precious metals $/oz
Gold 960 1150 1200 1000 800
% chg from pvs f'cast 3.0 32.4 45.5 25.0 6.7
Silver 14.69 20.03 22.00 17.00 15.00
% chg from pvs f'cast 2.5 32.6 45.7 13.3 0.7
Platinum 1183 1394 1500 1375 1400
% chg from pvs f'cast 2.8 21.2 20.0 9.1 10.2
Palladium 249 321 360 390 420
% chg from pvs f'cast 3.2 4.5 0.0 -4.4 0.5

Industrial metals $/T
Aluminium 1662 1819 2205 1984 1764
% chg from pvs f'cast 16.9 26.7 38.9 16.9 2.6
Copper 5173 5732 7275 6614 6283
% chg from pvs f'cast 23.3 29.7 37.5 7.1 0.0
Lead 1752 1653 2094 1764 1323
% chg from pvs f'cast 23.8 22.0 50.8 33.3 3.4
Nickel 15235 16397 17747 17086 16535
% chg from pvs f'cast 22.2 35.2 11.8 -5.5 -11.8
Tin 13913 14468 16535 15432 14991
% chg from pvs f'cast 11.9 15.6 15.4 4.5 0.0
Zinc 1609 1736 1984 1874 1764
% chg from pvs f'cast 18.2 20.5 11.1 -3.4 -15.8

(Reporting by Pratima Desai;editing by William Hardy)