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Gold May No Longer be Bound to the US Dollar

Middle East : 03 April 2010

According to a recent report from the World Gold council, gold’s place as a safe haven for the US dollar could be about to change. Traditionally gold has always been a commodity that investors turned to in recessionary times as its value appears to remain stable when other more risky commodities could be wiped out over night.

However a new report states that this assumption has a lot to do with gold’s link to the performance of the US dollar. In essence gold’s appeal to investors and banks has always depended on its function as a monetary alternative to hard cash which does not depreciate as paper money has  a tendency to do. At the present time however there are indications that this may no longer be the case.

Analysts are now saying that a debt situation like the one we are seeing in Greece has shaken this theory. Gold prices are responding negatively to Greece’s debt issues, which is something the market has not witnessed before. Gold prices are continuing to react negatively to Greece’s current debt issues and there is also an aspect of frenzy selling.

Investors are stating that gold prices will remain high for the coming year and by year end prices could have risen by as much as 30%.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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