Gold May Rally to $1800 and silver to $70

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Gold prices will surge to $1,800 an ounce by the end of this year, and silver will soar to $70 an ounce by March as physical demand climbs in Asia and investors seek a haven asset, Newedge USA LLC said.

“Gold is an excellent hedge in troubled times” as European and the U.S. leaders struggle to resolve debt woes, Mike Frawley, the global head of metals, said yesterday in an interview in New York. Demand for gold and silver will be “very strong long-term from Asia, and the economic trend in the West is improving,” he said.

The gold forecast indicates a 13 percent rally from current levels. The metal climbed to a record $1,610.70 on July 19. The silver estimate means prices will jump 77 percent from yesterday’s closing price. Newedge, based in New York, was the biggest futures-commission merchant by a measure of customer assets on deposit as of May.

Record investment demand for gold in India will keep climbing as higher incomes spur buying, Reliance Capital Asset Management, the operator of the country’s second-biggest fund backed by the metal, said last week. Chinese demand, which increased 32 percent in 2010, may double in the next 10 years, according to the World Gold Council.

Industrial metals such as aluminum and copper will also benefit from robust demand in emerging markets, Frawley said. Aluminum may climb to $3,000 a metric ton in the first quarter, and copper will rise above $10,000 a ton, he said.
‘Very Positive’ Outlook

“Millions of Chinese people are moving from the countryside to cities annually and that migration is leading to new jobs and new wealth, and the money is being invested in various opportunities,” Frawley said. “And you add to that the growth and modernization of India. The outlook for metals is very positive.”

Yesterday, gold futures for August delivery fell $4.20, or 0.3 percent, to $1,596.90 on the Comex in New York. This month, the price rose for 10 straight sessions, the longest rally in 31 years, as debt concerns in the U.S. and Europe escalated.

Gold will climb to $1,900 by October, John Taylor, the founder of FX Concepts LLC in New York, the world’s largest currency hedge fund, said yesterday in an interview in London. His firm manages $8 billion.

Silver futures for September delivery dropped 66.3 cents, or 1.6 percent, to $39.558 yesterday. In January 1980, the metal climbed to a record $50.35. The price reached $49.845 on April 25.

On the London Metal Exchange, copper for delivery in three months declined $85, or 0.9 percent, to $9,755 a ton yesterday. On Feb. 15, the metal reached a record $10,190. Aluminum dropped $14, or 0.5 percent, to $2,536 a ton.