GOLD prices are expected to soar above US$1,300 an ounce amid investor concerns of a double-dip recession, sluggish economic growth and high unemployment in the West, an industry report said yesterday.

The metal surged to an all-year high of US$1,294 an ounce in June because investors turned to gold as a traditional hedge against the sovereign debt crisis in Europe.

"I think we could easily see gold surge comfortably above US$1,300 (an ounce) before the year's out," said Philip Klapwijk, chairman of GFMS Ltd. "We'll probably get a fair bit of profit-taking as we head into the New Year but I wouldn't take that as a sign that the party's over - further gains in 2011 are far from out of the question."

The independent metals research firm cited the extraordinary monetary and fiscal policies being enacted by industrialized nations in the face of sluggish economic growth, the specter of a double-dip recession and already uncomfortably high unemployment as reasons for the firmness of gold prices. Such developments were seen undermining the value of equities or other conventional assets and interest rates remained low.

In China, gold is viewed as a safe haven against inflation and a symbol of fortune, and so the metal will readily be accepted by the Chinese.

In an economic boom, demand for jewelry gold, especially the 24-carat gold, rises while in economic uncertainties investment for gold is seen as an alternative.

In the second quarter of this year, China's consumer gold demand jumped 29 percent to 120 tons to rank as the world's second-biggest gold market after India. Jewelry gold demand in China, including the Chinese mainland, Hong Kong and Taiwan, rose 5 percent to 82.3 tons in the second half of the year. The appetite for gold as an investment surged 157 percent to 37.7 tons in the same period.