Despite Asian prices of gold declining on Thursday, Indian investors continue to believe in the psychological stabilizing effect of the yellow metal as gold buying grew 8 per cent to register an all-time high of 81.73 billion rupees, according to the Association of Mutual Funds in India (AMFI).

Indian nationals who participated in government bonds and national-savings schemes cashed in their investments to turn into buying gold.

According to AMFI, funds invested in sovereign debt shrank 4 per cent from a month earlier to 30.2 billion rupees ($606 million) in September.

Between April and September, investors took out 78.7 billion rupees from small-savings deposit plans such as those run by post offices, Bloomberg said quoting Indian government data, adding it was the most since at least 2000.

"There is asset-switching, and people are betting more on gold as it is a safer asset and offers a hedge against India's high inflation and the economic uncertainty affecting the world," Debasish Mallick, chief executive officer of Mumbai-based IDBI Asset Management Ltd. told Bloomberg. "Investing in gold is a very prudent asset-allocation strategy."

Funds invested in gold grew more than double from 35.2 billion rupees at the end of last year, while those placed with the sovereign debt shrunk 26 per cent from 41 billion rupees, AMFI data show.

Meanwhile, renowned investor Jim Rogers forecast the yellow metal will hit a dollar price of $2,400 per ounce.

"It will easily go to $2,000, but it will reach $2,400 over the course of the bull run, which has years to run," the Bullion Vault quotedRogers telling CNBC this week.

The yellow metal will definitely experience a bubble territory, but Rogers said this is still far from now.

"The way bull markets work is they go up and up and then by the end they turn into a bubble and that will happen to gold...[but] that could be five years, 18 years or six years," Rogers said, who co-founded the Quantum Fund with George Soros in 1973.

Analysts from HSBC also earlier forecast prices of gold will breach $2,000 per ounce in the near future.

Amid highly volatile market conditions, "we are looking for an average of $2025 for next year with a wide trading range of $1,700 to $2,300," HSBC precious metals analyst James Steel said.

https://www.ibtimes.com/articles/244252/20111107/gold-seen-hit-2-000-ounce-mid.htm