Dec. 2 (Bloomberg) -- Gold, heading for its biggest annual gain in 30 years, may rise as high as $1,600 an ounce in coming months as near-zero U.S. interest rates fuel demand, said John Wong, portfolio manager at New City Investment Managers Ltd.

The precious metal is likely to climb at least to $1,300 an ounce in the next three to six months, Wong said today at a press briefing in London. In March he forecast prices would advance as high as $1,250 this year. Bullion for immediate delivery rose as high as a record $1,217.23 today.

“If interest rates stay near zero, the cost of carrying gold in dollar terms is low,” said Wong, who co-manages the Golden Prospect Precious Metals Ltd. fund. Bullion has more room to climb than other raw materials because its gains this year have been smaller, he said.

Spot gold has added 37 percent this year, while palladium, lead and copper have more than doubled and crude oil is up 75 percent. Interest-rate futures show a 10 percent chance, up from 7 percent a week ago, that Federal Reserve policy makers will raise the target for the Fed funds rate to 0.5 percent when they meet in March.

Bullion gained 13 percent in November, the biggest monthly climb in a year, helped by news of purchases by central banks in India and other nations. Hedge-fund managers and other large speculators have increased their bets on higher prices for gold futures to the most since at least 1993, according to a report yesterday from the U.S. Commodity Futures Trading Commission.

Stoking Speculation?

Fed officials acknowledged this month that the record-low borrowing costs might fuel “excessive” speculation in financial markets and possibly dislodge expectations for low inflation. Gold’s rally has pushed its 14-day relative strength index, a gauge of whether a commodity is overbought or oversold, to 80.41, above the level of 70 viewed by some investors and analysts who scrutinize technical charts as signaling a drop.

“Bullish as I am on gold, my peers are talking about selling because prices are rising too far, too quickly,” said Wong. The metal may fall by a “minor” amount, he said.

Hedge-fund managers and other large speculators had a net- long position of 262,331 contracts as of Nov. 24, the CFTC figures show, up 11 percent from a week earlier. The Fed funds target is now zero to 0.25 percent.

Golden Prospect, listed on the London Stock Exchange’s International Bulletin Board, invests in bullion producers and exchange-traded products. The fund has more than doubled this year, raising its market value to 21.7 million pounds ($36 million). Vancouver-based Silver Wheaton Corp. was its largest holding as of Oct. 31, according to a fact sheet.

New City oversees about $600 million of assets.