Gold Rally To Keep Going To $1,200/Oz By Year End - Analysts

LONDON (Dow Jones)--Spot gold hit yet another record high Monday and market participants struggled to be bearish saying while the rise in gold has been driven largely by momentum buying, there is little to stop gold from rising to $1,200 a troy ounce before the end of the year.

"We think this rally is sustainable based on dollar weakness, central bank buying and inflation volatility," said Deutsche Bank analyst Michael Lewis. "The target is now $1,200/oz."

At 0856 GMT, spot gold was trading at $1,105.15/oz, having hit a record high of $1,108.30/oz earlier in the day.

Commodities across the board were up spurred by U.S. dollar weakness against the euro and European equities were higher.

Finance ministers from the Group of 20 leading economies pledged to maintain their fiscal stimulus measures at their meeting over the weekend and that weighed on the dollar.

"It looks as if we will have another period where we may see the euro/dollar make new highs for the year," said Mitsubishi analyst Tom Kendall.

On top of the supportive backdrop of a weakening dollar, central banks are set to be net buyers of the precious metal this year after 20 years of being net sellers, said Deutsche's Lewis.

Last week, India's central bank bought 200 metric tons out of a total of 403.3 tons of International Monetary Fund gold earmarked for sale and Sri Lanka's central bank said it has been buying gold to diversify its reserves amid volatile currency markets.