Gold, which rose to a record $891.70 an ounce on Wednesday, will climb to $1,001 this year on expectations the dollar will continue to weaken against other currencies, MKS Finance said.

Gold will average $872 an ounce, Geneva-based MKS, one of Switzerland’s four precious-metals refiners, said in an e-mailed note on Thursday. The metal averaged $697.09 last year. Some investors buy gold as an alternative investment when the dollar weakens.

Silver will rise as high as $19 an ounce and average $16, MKS said. The metal was trading at $15.50 as of 2:10 p.m. in London. Platinum will reach $1,700 an ounce and average $1,563, compared with Thursday’s price of $1,539. Palladium will touch $420 an ounce and average $365. The metal was at $370 on Thursday.

Gold gained in choppy European trade on Thursday as a weaker dollar and bargain hunting lifted the metal closer to record highs.

Spot gold fell early on as low as $866 an ounce but then recovered to $886.30. It was quoted at $883.50/884.30 an ounce by 1513 GMT, against $877.70/878.50 late in New York on Wednesday, when it hit a record high of $891.40.
“It’s partly dollar-related. Buying also came in when we moved below $880 as some people considered that level is a good opportunity,” said Frederic Panizzutti, analyst at MKS Finance.

“It looks that the $900 level is very close now and might be an imminent target in the next couple of days. There are many supportive factors. The dollar is weak and we have the beginning-of-the-year asset reallocation.”

The euro climbed against the dollar after European Central Bank president Jean Claude-Trichet flagged more interest rate increases in the euro zone, citing lingering inflation pressures.

A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand.

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