, IncFebruary 7, 2010 – After the dollar has had its brief run, gold is likely to continue its consolidation for a rally as gold prices appear to be ready to climb. Based on the opinions of investment strategists and analysts who see the past two months as a correction, many expect prices to climb as high as $1,350 or $1,400 over the coming months.
Although some point to the recent activity of the dollar as the reason for the decline in gold prices, many analysts are not convinced, due to gold’s fundamental strength and the dollar’s fundamental weaknesses. After increasing nearly $300 per ounce from July to December last year, gold needed a correction; that correction has been taking place the past two months.
The dollar, on the other hand, has flaws that make it extremely vulnerable. Most of the success enjoyed by the dollar recently has come at the expense of the euro and EU countries like Spain, Portugal and Greece who are in serious fiscal trouble. The problem for the dollar is that the United States is also in serious trouble; the current rampant spending and the crushing national debt are creating a weakness that the currency soon will not be able to overcome. This predicament plays right to gold’s strength as a hedge against difficult economic times.
When the underlying market demand supports gold’s price and the economy is in disarray, gold prices are perfectly positioned to rise; this is the condition that the world is realizing now. Gold bullion, certified coins and other investments are likely to soar as investors look for security for their current holdings and additional future profits.
Stewart Lawson
Senior Staff Writer - GoldPrice.net
