- ANZ remains bullish on gold
- European buying seen as a sign of economic stress
- Higher prices may limit Asian buying

By Chris Shaw

Gold recorded solid gains in October, closing the month 6% higher. As ANZ Banking Group notes, the metal was helped by signs Europe was finally making progress on its debt problems and as gold again became a safe haven play for investors.

The bank's senior commodities strategist Nick Trevethan suggests in November the outlook for gold remains positive, as sovereign debt issues are still a concern and there continue to be risks to the global growth outlook.

Trevethan is forecasting a year-end price for gold of US$1,850 per ounce, with a push through the US$2,000 per ounce level likely in 2012. These further price gains are likely to be harder won and much slower given the volatile correction in the gold price seen in September.

What should support the gold price in Trevethan's view is that the appetite for, and the wealth needed to buy, gold in emerging economies is increasing. At the same time, low interest rates and government stimulus measures in the West have made the opportunity cost of investing in gold very low. This positive environment is expected to persist for another year or two.

A contrast to 1980, when gold previously enjoyed a strong run then a severe correction, is the gold market now is significantly different. As Trevethan notes, the gold market in the 1980s was dominated by professional investors whereas