Gold will probably average 800 dollar an ounce, compared with 696 this year, according to an estimate of 37 traders, analysts and investors surveyed. Gold appreciated 30 per cent to 824.50 dollar an ounce in London through December 26, its best year since 1979, when the Iranian revolution crippled crude oil exports and US inflation surpassed 13 per cent.
Gold rose as record oil prices drove up inflation, and supplies from South Africa, the world's biggest producer, dropped to the lowest in 84 years.
Mounting losses in credit markets tied to subprime mortgage loans spurred demand for alternatives to stocks and bonds, while the dollar's drop to a record against a basket of trade-weighted currencies boosted investor interest in commodities.
Prices rose within 0.5 per cent of the record high on November 7, the second-best-performing metal after lead on the UBS Bloomberg Constant Maturity Commodity Index this year. The index of 26 commodities gained 22 per cent through Dec. 26.
US consumer prices increased 0.8 per cent in November, the most in more than two years. Inflation in the 13-nation euro region accelerated to 3.1 per cent in November, the fastest since 2001, according to Eurostat. Japanese consumer prices rose 0.1 per cent in October, the first gain of 2007.
Investment demand for gold may "easily" rise to 500 tons, worth about 13 billion dollars, compared with 384 tons last year, said Philip Klapwijk, chairman of London-based research company GFMS Ltd.