Gold prices in 2010 are expected to surpass last year’s record high of $1,226/oz and could reach $1,300/oz if the economic recovery is not slow and new funds for investment enter the market.

Speaking to Mining Weekly, consultancy firm GFMS said in the first half of 2010 gold prices will average $1,175/oz and will trade in the price range of $990/oz to $1,230/oz during the first six months.

In the second half of 2010 prices could escalate to $1,300/oz.

GFMS said chances of a sluggish economic recovery are high, with the possibility of a double dip in the US, Japan and European economies.

In 2010 investment demand is expected to be robust, providing a favourable outlook for gold.

Investors, which expect gold prices to increase further, are purchasing gold as a safe haven investment and a barrier against inflation.

Prices will be severely impacted once interest in gold dies.