Gold could easily re-gain the $1,000 mark in the coming months and may move up to fresh record highs before the end of the year, said Philip Klapwijk, chairman of Gold Field Mineral Services.
The consultancy forecasts that gold price will reach a new record high in the second half of 2009 as the threat of inflation will drive a new wave of investments.
The London-based global precious metals consultancy firm, however, warned that the rally may not be straight as a summer lull or the need for inflationary pressures to build could result in a period of sub-$900 prices in the short term.
Speaking at the launch of the 13th Chinese language edition of its annual Gold Survey on Wednesday, Klapwijk commented: "The price may have pulled back a fair bit from the February highs, but that was largely just the market's reaction to jewellery demand crumbling and scrap booming. We believe that it is far from 'game over' for investors."
In his presentation to mark the launch of the Chinese language edition, GFMS' chairman commented on some of the major supply-demand trends unfolding this year and noted some increase in the overall supply in 2009.
This is because of an expected drop in the net official sector sales which could be offset by a modest increase in mine production. There had been a record high in recycling fabricated products.
On the demand side, the fabrication demand, dominated by jewellery, is expected to fall considerably in 2009 due to high and volatile gold prices coupled with the slowdown in the global economy.
As a result, the market will move into substantial surplus this year and much of the gap is expected to be filled by investors.
The consultancy believes that sustained concerns over the global economy and the health of the financial system will continue to fuel safe haven interest in the yellow metal.
Moreover, investors will increasingly focus on a newer worry, namely, the probable longer run inflationary consequences of governments' and central banks' ultra-loose fiscal and monetary policies.
The precious metal recovered in London to trade at $915 on Thursday from the low of $907 previous day.