Reuters quotes porfolio manager Axel Merk in 'Gold could rise further after futures hit $800'.

" 'There is a ... danger of inflation spiking, and there is a ... danger of a very serious slowdown. It's not the type of balance that you want to have,' said Axel Merk, portfolio manager of Merk Hard Currency Fund (MERKX.O) in Palo Alto, California.

Merk, whose fund has around $200 million of assets under management, said that he expected price volatility of bullion to pick up because of the return of momentum players as gold hits $800 an ounce.

However, Merk contended that the ongoing credit contraction in a way should be negative for gold.

'The reason that gold is moving up anyway is because everyone has full confidence in the Fed that it will do anything in its power to prevent a contraction from spreading too much,' Merk said.

'It's my view that the Fed is not going to succeed, and therefore will just have to open money supply even further. And that's why in the end gold is going reach higher levels,' Merk said."