, IncFebruary 8, 2010 – Gold has been holding steady today after two days of gains due investors seeing it as an alternative investment. The US Dollar Index is down slightly, indicating its recent run may be nearing its end. Many analysts see both the steady drop in the dollar and last week’s tumble by gold as a sign that the gold prices are nearing an increase.
The gold spot price dropped 1.4% last week on some technical selling, creating the fourth consecutive week with a net drop. The US Dollar Index fell as well, suggesting that gold and the dollar are beginning to act independently as the dollar rides weakness in the euro and gold finds its bottom after correcting. Peter Fertig, owner of Quantitative Commodity Research Ltd. puts it succinctly when he states, “The dollar is down. The metal’s (gold’s) sudden drop last week is also a good indicator that prices may rise.”
The missing inverse relationship that frequently exists between the dollar and gold prices indicates two assets at different stages of reversal. The dollar appears to be reversing its recent gains on fears that the US economy can not recover as quickly as hoped; gold, on the other hand, is closed today at $1,065 and appears to be prepared to reverse and climb based on solid fundamentals and heightened demand. Randgold Resources Ltd CEO Mark Bristow has gone on record stating his belief that gold prices will trade upwards of $1,200 this year and $1,500 after that.
For people looking to protect and grow their wealth, now is a very good time to get into gold. As demand increases and people invest based on fundamentals and not the dollar, gold prices are likely to rise. Purchasing gold bullion or certified gold coins while prices are near the bottom is an excellent way to potential profit as strategists expect a gold price increase.
Ronald Stevens
Senior Staff Writer - GoldPrice.net
