Fears of another U.S. recession after the S&P downgrade of the country's sovereign debt and the euro zone's debt crisis had increased investor appetite for gold, Citigroup said, prompting the brokerage to raise its outlook on near-term gold prices.
Spot gold struck a record top above $1,878 an ounce, after staging its biggest weekly gain in 2- years last week.
U.S. gold jumped 1.6 percent to a record high of $1,881.9 earlier on Monday.
"Increased global risk, U.S. dollar weakness, growing inflationary fears, the U.S. debt downgrade and continuing sovereign debt risks in Europe have increased investor appetite for gold, triggering recent price strength," Citigroup said in a note.
The brokerage now sees gold prices of $1,650 per ounce for 2012 and $1,500 per ounce for 2013.
It had previously forecast $1,325 per ounce for 2012 and $1,225 per ounce for 2013.
Citigroup raised its rating on Petropavlovsk citing the London-listed Russian miner's near-term growth profile through a production ramp-up at its Pioneer mine and new mines Malomir and Albyn in Russia.
The brokerage also raised its price target on other UK-listed gold miners such as Randgold Resources, Centamin Egypt, European Goldfields and African Barrick Gold, a unit of the world's largest gold producer Barrick Gold Corp.
© 2013 Thomson/Reuters. All rights reserved.