Gold Could Bust through $2,000 by Year's End: Analysis

Gold could rally through $2,000 an ounce by year's end, according to a Thomson Reuters GFMS report released Thursday.

The consultancy's report concluded that total worldwide gold investment will rise in the second half of this year to a record of slightly more than 1,000 metric tons. In U.S. dollar terms, that amount of gold equates to more than $60 billion, a sharp contrast to the consultancy's first-half 2011 figure of $29 billion, based on 624 metric tons.

Some may think our first-half figure sounds a little conservative, but we should remember that early 2011 saw a wave of profit taking as the prior rally ran out of steam, and equities were still enjoying a nice bull run, said Philip Klapwijk, Global Head of Metals Analystics at Thomson Reuters GFMS.

The report notes a sea change in investor behavior due to sovereign debt worries in Europe and America's apparent inability to deal with its ballooning national debt.

Also important are deteriorating prospects for global economic growth, the maintenance of low interest rates, fears over the emergence of inflation in the industrialized world, continued inflation in many emerging markets and the outbreak of conflict in North Africa and the Middle East.

Further, the report notes a surge in net official sector purchases to more than 200 metric tons in the first half of this year from just 77 metric tons for all of last year.

We are in essence in chapter three of the central bank story: We've left behind a period of heavy net sales, then a a short period of neutrality and we're now in a new environment of heavy buying, said Klapwijk.

Jewelry demand in the first half of this year also grew 7 percent year-on-year despite a 25 percent rise in the period's average price.