$800/oz gold unlikely by 2007: PIMCO

NEW YORK (Reuters) - Gold is an attractive asset over the long term but is unlikely by next year to breach the $800-ounce range that market bulls are eyeing, the investment head of bond and commodities fund PIMCO said on Monday.

"In order to really see gold pass 800 bucks, you really need to get the world in a reflationary mode, as opposed to a disinflationary mode," Bill Gross told the Reuters Investment Summit in New York.

Gold hit a record of around $875 an ounce in 1980 on the New York Mercantile Exchange's COMEX division.

In May this year, the price scaled 26-year highs of above $730. On Monday, February gold GCG7, the current COMEX benchmark, closed at $634.80, up $3.80 on the day.

Market bulls are betting on the price revisiting $800 by next year.

But Gross noted that the record high price "occurred during a period of time which people thought inflation would be at last 10 percent a year and therefore gold would be an attractive asset.

"In other words, the 800 bucks was way ahead of its time because inflation instead of being 10 percent a year came down over the next several decades, and that's why gold came down as well," he added.

He said latest economic data showed around 20 countries were moving their inflation estimates down instead of up due to influence from globalization and other factors.

"So, if the dollar goes down 6 to 7 percent next year, logically that relationship in dollar terms should import 5 or 7 percent on the gold price," said Gross. "I think gold is an attractive long-term holding to balance the proclivities of central banks to create leverage and credit."  Continued...