Gold May Peak in 2007: Survey

Gold prices may peak in the first half next year driven by rising demand for luxury goods in India and China, according to Westpac Banking Corp.

Gold for immediate delivery may trade above $700 an ounce at the end of this year, Huw McKay, senior international economist at Sydney-based Westpac, said in an interview May 17. Gold has averaged $659.34 so far this year after reaching a 26-year high of $730.40 last May.

Demand in India, the world’s largest buyer of the precious metal, rose by half in the first quarter from a year earlier, while demand in China gained 31%, the London-based World Gold Council said last week.

Westpac’s McKay expects prices to remain at historically high levels for the next three years. “The demand for gold is growing” in China, Ian Cockerill, CEO of Gold Fields Ltd, said. “Look at the new found wealth in that country and the burgeoning middle classes and their demand for gold, it has been very, very strong despite the higher prices.”