CIBC World Markets predicts that the price of gold will continue to rise, peaking at between US$340 to US$360 per ounce.

The firm made the call in a report called A Time for Gold. “We believe that the 2002 run-up in gold prices is sustainable and that it has significantly further to go,” says Bart Melek, senior economist and co-author of the report. “Only until confidence in the markets returns do we expect gold to retrace its path to a steady state of approximately US$320 to US$325 per ounce.”

A low U.S. dollar, stable central bank sales, reduced hedging activity and a dwindling mine supply are the main factors behind this forecast.