THE price of gold, which last week hit a new record, is set to scale new heights before the end of 2008, bullion traders predicted this weekend.

Prices topped $860 an ounce last week – well above the $850 record set in 1980. The weakness of the US currency has helped to boost the dollar price of gold, but the metal has also been lifted by the geo-political tensions raised by upheavals in Pakistan and fears that inflationary pressures are increasing.

And a survey of gold analysts due to be published this week is expected to show that they predict prices this year will be well ahead of the $695-an-ounce average seen in 2007, continuing a bull run that has lasted for seven years.

Ross Norman, a director of Thebulliondesk.com, forecast that the average price of gold in 2008 is likely to be about $950 an ounce, and the year could see prices spiking as high as $1,150. “It might possibly even touch $1,200,” he said. It started last year at $640.75.

The opening of exchanges for trading gold has increased the metal’s attractions to investors. China has had a spot market for gold for two years and is to open a futures market on Wednesday. Dubai already has an exchange and Vietnam and Pakistan plan to follow suit.

Gold has also become more accessible to investors in the past 18 months with the emergence of exchange-traded funds whose prices are closely linked to the bullion price. One of the participants in the market, ETF Securities, saw the value of its assets under management – including funds covering industrial metals, energy and agricultural commodities as well as gold – mushroom from $200m to $2.4 billion.

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