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Gold’s Best Forecaster Says Prices to Reach $1,630: Chart of Day

Gold may climb as high as $1,630 an ounce next year as investors seek protection from financial turmoil in Europe and the U.S. and as Chinese demand rises, according to Tom Kendall, the most accurate forecaster for 2010.

The CHART OF THE DAY shows gold’s 26 percent gain this year and the Dec. 7 record of $1,431.25 an ounce. The metal may climb as much as 18 percent in 2011, said Kendall, an analyst at Credit Suisse Group AG in London. In this year’s London Bullion Market Association survey, Kendall predicted this year’s high within 0.1 percent. The red line shows the median forecast of 20 analysts surveyed by Bloomberg for next year’s average price, currently $1,400.

“We’re still in an era of unusual financial market instability and stress,” said Kendall, who was at Mitsubishi Corp. (U.K.) Plc when he made his gold forecast for the LBMA. “We’re going to stay with very low to negative interest rates in real terms and that’s also very supportive for gold.”

In China “there’s increasing imports of gold and a real boom in retail investment in physical gold there,” Kendall said. “Inflation is definitely playing into the market” in China, he said.

The LBMA gives a one-ounce bar of gold to the most accurate forecaster of average prices, not the year’s high. On that basis, Philip Aubertin of UBS AG would win. He declined to give a forecast for 2011 because analyst Edel Tully will provide the LBMA with the bank’s outlook for next year, he said.

(To save a copy of this chart, click here.)

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