The spectacular bull run in gold prices is unlikely to end soon, with bullion retaining its appeal in 2012 due to the uncertain global economy, analysts and industry officials said on Friday.

Gold's growing allure for buyers ranging from central banks to retails investors will provide a cushion for prices, even if the euro zone ended its debt crisis and the global economy embarked on a recovery, they said.

There have been short periods where the price action has taken on bubble characteristics but I don't think the gold party is over, said Tom Kendall, head of precious metals research at Credit Suisse.

If we have a bear market in trust, then it would be a bull market in gold. And now we have a bear market in trust worldwide, which is contributing mightily to the unsettled state of markets.

Gold's safe haven appeal helped push bullion prices to a record high of $1,920.30 in early September, although in recent months gold has moved in tandem with riskier assets as the liquidity crunch forces investors to close their gold positions to cover losses elsewhere.

Zhang Bingnan, vice chairman of the China Gold Association, said the unsustainable debt burdens of both Europe and the United States would encourage them to print more money, making gold all the more attractive.

Whether or not Europe and the United States find a way out of their debt mess, there is one thing for certain -- investors would now be more convinced than ever that they need to have a larger portfolio in gold, Zhang said.

The paper currency, government bonds and equities are not solid investments that can stand the test of time. Gold is the only asset that will last.

In an indication of the increasing appetite for gold from the official sector, South Korea's central bank said it had purchased 15 tonnes of gold in November and intends to boost gold holdings as part of the long-term effort to diversify away from dollars and securities.

WORST FEARS PRICED IN?

Robin Bhar, senior metals analyst at Credit Agricole, said it was possible that a lot of the fear premium caused by the global economic uncertainty has already been priced in for gold.

The overriding fear in that the euro zone's sovereign debt problem would cause a new banking collapse, but there is a sense that EU policymakers and relevant authorities now realise the gravity of the situation and must not disappoint the markets, Bhar said.

The next couple of weeks will be critical for the market but if the latest eurozone debt proposals are well received, then overall sentiments would start to change.

Investors are watching a key euro zone summit next week during which European politicians are expected to work on a definitive plan to contain the two-year-old debt crisis.

Some analysts said that if the market sentiment stabilises, there could be a marginal reduction in investment demand for gold as investors move into other asset classes.

Investors will start to move away from gold once an unbridled fear of a global economic collapse fades, said Jeffrey Christian, Managing director of consultancy firm CPM Group.

Even in that scenario, gold would remain supported due to its nature as a hedge against inflation, as central banks around the world are most likely to ease monetary policies to provide cheap cash and kickstart growth, which would boost the inflation outlook down the road, analysts said.

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