Gold prices: Nowhere to go but up

NEW YORK (CNNMoney.com) -- Better buy your bling now. The price of gold is climbing.

So far this year, gold prices are up about 22 percent to nearly $750 an ounce - helped by the declining dollar and growing interest from institutional investors.

And given a confluence of factors, including heightened seasonal demand, analysts believe that prices for the precious metal will move higher still and are poised to shatter its all-time record.

Historically, gold has been considered a safe-haven for investors jittery about inflation or the economy.

With skittish investors diversifying their portfolios with commodities, demand for gold has shot up. During the summer's market meltdown, prices remained modestly higher compared to the start of the year before moving higher in recent weeks. Just last week, gold hit $744.80 an ounce - its highest level in 27 years.

Many analysts say the biggest driving factor has been the weakening dollar. A weaker greenback makes gold, which is priced in dollars, more attractive to buyers outside the United States.

At the same time, worries about inflation have also stoked gold prices, according to Jon Nadler, an analyst with Kitco.com.

Indeed, gold typically attracts investors looking for a hedge against inflation. That factor has become especially important now with oil prices near record highs and after the Federal Reserve cut interest rates last week for the first time in four years.

And gold could find even more support at the consumer level. Typically, the period from September through year's end sees demand for gold climb in the United States amid the holiday shopping season. Demand is also high in India, the world's largest consumer of gold, because the next few months are a popular time for weddings and mark the celebration of the Hindu new year.

Of course, if interest by institutional investors or hedge funds wanes or consumer demand for jewelry slackens amid weakened consumer spending, gold prices could move right back down, according to experts.

By some analysts' estimates, gold prices are headed for $750 an ounce by the end of the year.

Peter Spina, an analyst with GoldSeek.com, speculated the price could even top its all-time high of $850, set in January 1980.

"It's easily within reach by year's end," he said.

Granted gold is looking more attractive given recent signs of softness in the U.S. economy, though the climate is not nearly as dire as it was in 1980. At that time, the United States was dealing with record oil prices and soaring inflation as well as an unstable geopolitical climate that included the Iranian hostage crisis.

And what would it take for gold to reach the more lofty price of $1,000 an ounce?

That would require a major geopolitical event or another unexpected half a percentage point cut by the Fed, said Carlos Sanchez, the associate director of research at the New York-based commodities firm CPM Group.

"We may get to $1,000," he said. "But there would have to be some serious circumstances."