Gold to shine as dollar ails

By Jan Harvey

LONDON (Reuters) - Gold prices are set for solid gains this year and next, with the $1,000 mark in sight, as potential inflationary concerns and a softer dollar outlook prompt analysts to ramp up forecasts, a Reuters survey showed.

The poll of 48 analysts and traders showed that expectations for gold prices this year have risen 7.8 percent to a median $930 from $862.50 in a similar survey carried out in January, when fears over the economic outlook were at their height.

Expectations for prices of the more industrial precious metals -- platinum, palladium and silver -- have risen still further, with hopes for an economic recovery helping allay fears demand would continue to tumble.

"We think gold will get $1,000 in its sights again (by year-end)," said RBS Global Banking & Markets anlayst Stephen Briggs. "There is clearly a risk of inflation building up and there are clear risks of the dollar weakening sharply."

"We're looking at lower central bank sales than we've had, static, stagnant mine production and, if the world economy picks up, there will also be a pick-up in jewellery demand."

Gold has already performed solidly so far in 2009. Spot gold was bid at $935.65 an ounce at 10:06 a.m. on Thursday.

Median forecasts for the yellow metal stood at $930 an ounce in the third quarter of this year, moving up to $951 an ounce by the last quarter as seasonal demand weakness eases and the economy picks up.

Gold prices are seen rising further in 2010, with the median forecast climbing to $975 an ounce. The 2010 forecast is 13 percent above the price view for the same year given in January, of $862.50 an ounce. On the U.S. COMEX gold futures market, the June 2010 contract was trading at $943.50 per ounce.