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Gold prices may rise to $US5000 an ounce as investors seek to protect themselves against accelerating inflation, said Schroder Investment Management, which oversees $US277 billion of assets globally.

''You could easily see for the next several years that prices rise not to $US1000 an ounce, but prices rise to $US5000 an ounce or beyond as inflation psychology becomes more and more embedded and people become desperate to have a source of value,'' said Christopher Wyke, London-based emerging market debt and commodities product manager at Schroder, which oversees about $US10 billion of commodity assets.

Investors are turning to gold for protection as two-thirds of the world's population cope with inflation rates that are climbing to more than 10 percent, Wyke said. Cash and inflation- linked bonds are poor substitutes as low interest rates, coupled with surging inflation, erode the real value of assets, he said.

Gold futures for August delivery rose $US10.70, or 1.2%, to $US904.20 an ounce on the New York Mercantile Exchange, the highest closing price for a most- active contract since May 28. Wyke didn't give a time frame for his gold prediction.

Demand for gold will also rise as central banks become net buyers for the first time in 20 years, driven by developing countries, he added. Last year, world production of gold sank to the lowest since 1937 as reserves are depleted and few new sources of gold have been found.

New Fund

Wyke was speaking at a press conference in Hong Kong to market the Schroder Alternative Solutions Gold and Metals Fund, the first commodity fund authorized for sale to individuals in the city that invests primarily in derivatives, including futures, warrants, swaps and options. Robert Howell and Paula Bujia will manage the fund.

Gold may account for about 40% of the fund's assets, based on a ''model'' fund used to simulate returns, said Wyke. The fund would also buy securities linked to metals including aluminum, copper, iron ore, zinc and uranium.

The limited amount of gold available, relative to the size of the global capital markets, means a small shift in investments may lead to significant price changes for the metal, Wyke said. Total gold above ground is worth about $US4.8 trillion, compared with global stock and bond markets worth $US135.2 trillion.

UBS, Hang Seng Bank, KBC Groep and Lehman Brothers are among firms that manage commodity funds in the city, according to the Hong Kong Securities and Futures Commission. Bank of East Asia in February started a fund that buys shares of companies that produce materials and energy.