Gold's record-breaking rally of the last decade is set to extend into this year and next as monetary policy stays loose and central banks build reserves, a Reuters poll showed on Thursday.
Silver is expected to decline for a second year running after hefty price swings spooked investors last year.
The survey of 45 analysts carried out by Reuters in January predicted an average spot gold price of $1,765 an ounce in 2012, 14 percent higher than last year's average of $1,544. This was itself 26 percent above 2010's $1,228 an ounce.
Several big banks, including UBS, Morgan Stanley and Societe Generale, forecast the average price would break above the $2,000 level, which would be well above last September's record $1,920.30. Their predictions highlight the extreme nature of a rally that started in 2001 from an average level of $270.
The Federal Reserve's pledge this week to keep U.S. interest rates at rock-bottom levels for a number of years and hints at fresh monetary easing are set to fuel further gains in gold as the moves cut the opportunity cost of holding bullion and keep the dollar in check.
But signs of strength in the U.S. currency late last year have unsettled investors, while rising appetite for other assets such as stocks could make trading conditions turbulent.
"If you look at gold's performance up to mid-year 2011, it was almost a straight line higher," said Tobias Merath, an analyst at Credit Suisse. "Then we had this period of funding stress and a stronger dollar, and we saw a correction," Merath said.
"Now gold is tentatively recovering. It is probably resuming its upward trend, but what we believe will happen is that the straight line we are used to will turn into a zig-zag," he added.
Central banks' commitments to low interest rates are firmly underpinning prices, as is a move in official sector activity in the gold market from selling to buying. Central banks bought more bullion last year than at any time since 1964.
Concerns over sovereign risk in the euro zone, which have even extended to speculation the bloc may break up, sparked heavy gold buying in Europe and elsewhere in 2011 as investors diversified out of European assets. But the support offered by the crisis has faltered in recent months.
"If you are investing in gold because you believe the gold price will go up, you will keep on putting money into it," said David Jollie, an analyst at Mitsui & Co. Precious Metals.
"If you are buying it as an insurance policy for the rest of your portfolio, once you have a certain amount, do you really need to keep adding to that? I think the answer is, you don't. Things will have to keep getting worse for you to think you need more gold."
In 2013, gold is expected to extend its run higher, but the rate of appreciation will again be slower. The average forecast gold price for next year is $1,835 an ounce, just 4 percent above the forecast for this year.
Average silver prices meanwhile are seen easing to an average $33.21 an ounce this year from last year's median price level of $34.99 an ounce, little changed from current levels.
Investors remain shy of the white metal, which is used in electronics manufacturing and jewelry, after prices slumped by a third in the five sessions after they hit record highs last spring.
"Silver's violent price moves last year have undermined its investor appeal for the time being," said UBS strategist Edel Tully. "The market needs fresh catalysts to encourage more participation."
"We still do not rule out another stab at $50 an ounce. Given our expectation for gold to make new highs in the coming year, we could very well see silver enjoying some spillover benefits. But for this to happen, silver needs to rebuild its investor base," she added.
"With 50 percent of overall demand accounted for by industrial applications, this could be a drag on silver's performance."
Silver's appeal has been undermined by the decline in the photography sector, which 10 years ago accounted for around a quarter of demand.
By 2010, silver off take by that industry had dropped 64 percent in tonnage terms. Photography company Eastman Kodak filed for bankruptcy protection earlier this month after failing to embrace digital photography.
Silver mine supply has also hit record levels in recent years.
In 2013, the analysts polled see silver prices rising to $35 an ounce, up on their expectations for this year but still well below last year's record high of $49.51 an ounce.
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