Gold may touch $1000: JP Morgan

Gold may rise to more than $1,000 an ounce as demand from India, China and exchange traded funds increases and production of precious metal falls, according to JP Morgan Chase & Co., the third-largest US bank.

Gold, which has risen 5.2 per cent this year, may reach $850 an ounce in the "medium term,'' on the way to $1,000, analysts from JP Morgan led by John Bridges said in the report dated June 6. They didn't specify what the medium term was.

Gold-mining companies reduced output to a 10-year low of 2,471 metric tons in 2006, according to London-based researcher GFMS Ltd. Demand for gold from India, the world's largest buyer, rose 50 percent in the first quarter of 2007 while demand in China gained 31 percent, according to the World Gold Council.

"We would continue accumulating gold and silver positions looking to higher prices by year-end,'' the analysts said. "A four-figure gold price looks quite feasible to us given the tight supply demand situation in the gold market.''

Gold for immediate delivery fell as much as $1.30, or 0.2 percent, to $669.45 an ounce and traded at $670 at 11:56 am Sydney time. Silver for immediate delivery fell 1 cent to $13.69 an ounce.

Demand from this year's Indian wedding season, the Chinese year of the 'Golden Pig,' and purchases by exchange traded funds may boost prices, the analysts led by Bridges said in the report.