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Speaking to the Financial Times, Philip Klapwijk, executive chairman of stock exchange market trend firm GFMS, said prices of gold need to fall below $900 (£580) in order to help support the jewellery industry.
India is the world's largest gold importer and gold prices of between $700-800 would help boost demand from the country, as well as others such as China.
However, before prices reduce, the short and medium term will see them rise. Mr Klapwijk told the newspaper it would be "very likely" that within the next six to 12 months, gold will exceed $1,300 a troy ounce.
"It is difficult to argue that prices could be sustainable," he said, adding: "This is a market that has moved out of kilter with its underlying fundamentals."
Demand from Asia and the motoring sector could push white metals such as platinum to a more popular level with investors than gold, the Telegraph recently suggested.
Posted by Greg Secker
