Aug. 26 (Bloomberg) -- Newmont Mining Corp. Chief Executive Officer Richard T. O'Brien said gold prices ``probably'' will reach records in the next year as investors seek a buffer against accelerating inflation.

Gold has declined 20 percent since credit market losses and a weak dollar drove the price to an all-time high of $1,033.90 an ounce in March. Investor interest in the metal may be revived as inflation reduces the value of other assets, O'Brien said yesterday in an interview from Denver, where the company is based. Newmont is the largest U.S. gold producer.

O'Brien's view that inflation will accelerate contradicts that of Federal Reserve Chairman Ben S. Bernanke, who said last week that price increases may slow later this year as oil declines and the dollar strengthens. Higher energy and food costs pushed consumer prices to the steepest gain in 17 years in the 12 months through July, government figures show.

``People are starting to get a whiff that inflation will not be as bad as they thought a month or two ago -- that is not what I believe,'' said O'Brien, 54. ``We continue to see the potential for worldwide inflation, and gold continues to offer a place for investors that is uniquely positioned.''

Gold futures for December delivery rose $2.30, or 0.3 percent, to $828 an ounce at 1:03 p.m. on the Comex division of the New York Mercantile Exchange. The metal has gained for seven straight years.

Reduced production and increasing jewelry purchases outside the U.S. also may boost prices later this year, O'Brien said.

Gold production fell 0.4 percent last year to an 11-year low after output from Africa and the Americas declined, London-based market researcher GFMS Ltd. said April 9.

Newmont rose 41 cents to $44.12 in New York Stock Exchange composite trading. The shares dropped 10 percent this year through yesterday.

To contact the reporter on this story: Stewart Bailey in New York at sbailey7@bloomberg.net.

Last Updated: August 26, 2008 13:08 EDT