Gold prices have risen from $265 an ounce in early 2001 to a record $1,461.90 an ounce this week, lifted in recent years by safe-haven buying linked to the credit crunch, dollar weakness, producer de-hedging and lower official sector sales.
In the decade to come, soaring demand in major consumers China and India , where incomes are rising, is likely to extend this further, the bank added.
"We find that there is a powerful relationship between income per head in Asian emerging markets and the gold price, which suggests further significant upside for gold," it said in the report. "Also, our FX team is forecasting further (dollar) weakness against the Chinese yuan and Indian rupee."
This would make dollar-priced gold cheaper for holders of those currencies.
"Our base-case forecast is that prices rally to peak at an average $2,107 an ounce in 2014, although our statistical modelling also suggests a possible 'super-bull' scenario of gold prices rallying up to $4,869 an ounce in nominal terms by 2020."
It said it did not expect a rise in headline U.S. interest rates, currently at historically low levels, to derail gold's rally until real rates start rising in several years' time. Increased primary gold production may have a negative effect, however.
"We expect a steady acceleration in mine supply growth in the years ahead, which should overwhelm demand growth beyond 2014," it said in the report. "Nevertheless, we expect an extended period of high gold prices.
Source : ET