Barclays Capital analysts see gold price reaching $1,000 again this year

LONDON (Reuters) -

Gold prices could exceed $1,000 an ounce within the next few months as investors exit other commodities on heightened fears over a global economic downturn, said Barclays Capital.

Barclays' metal analysts, speaking at a press briefing on Thursday, said the current market turmoil is likely to lead to short-covering in base metals while long-term investors head for gold which is perceived a relatively safe asset.

"In current volatility, I certainly wouldn't rule out $1000 with investors turning more positive toward gold," said Suki Cooper, a commodity analyst at Barclays Capital.

Earlier on Thursday, spot gold hit an intra-day high of $908.90 an ounce -- near a 1-week high of $920 touched on Wednesday well below a record high of $1,030.80 hit in March as the dollar fell and financial worries deepened.

With the credit crisis sending global markets around the world into a downward spin in recent months, Barclays analysts said demand for base metals worldwide is likely to worsen.

"Huge uncertainty in the global economy and sharp downward revision to growth expectations suggest a period of very weak metals prices for the rest of this year and into early 2009," said Barclays analyst Kevin Norrish.

Norrish added that in the base metals complex, prices for lead, nickel and zinc could fall further and trade below their marginal cost of production with a potential longer period of attrition.

Copper and tin were seen as long-term winners, as the two markets are dogged by tight-supplies.

Barclays' forecasts for 2009 are copper at $6,500 a tonne, tin at $17,000 and aluminum at $2,600.

Copper for three-months delivery on the London Metal Exchange was at $5,335 a tonne by 1622 GMT, while tin was at $14,700 and aluminum at $2,300.

Ahead of LME Week, Norrish said the fall in metal prices and bearish outlook "how bad will things get" is set to be a main focus.

But Norrish was optimistic due to the majority of demand for metals now coming from developing rather than industrialized economies as was the case in previous slowdowns.

"Thing's won't be quite as bad as in previous downturns," he said, although a difficult 3-6 months awaited metal investors.