Gold News

Gold Buying to be boosted as 'dollar bears ascend'

Gold Investment supporters received a boost today (May 21st) after a senior figure at Calyon suggested that the US dollar will struggle to shake off its bearish tendencies.

The Federal Reserve has revealed that "a further increase in the total amount of [Treasury] purchases might well be warranted" to prevent the recession deepening further.

Meanwhile, the dollar - which moves in the opposite direction to Gold Prices - has fallen to its lowest point this year against six other major currencies, according to the Dollar Index.

Mitul Kotecha, head of global foreign-exchange strategy at Calyon in Hong Kong, has explained that the greenback will now struggle to reverse this trend in the coming weeks and months.

He told Bloomberg: "There was always a risk that a Fed discussion about increasing Treasury purchases would play negatively for the US dollar given the four percent drop in the US dollar when the Fed initially announced its Treasury purchase program.

"The US dollar bears are in the ascendancy and there is little to suggest a turnaround anytime soon."

Mr. Kotecha's comments come after Jeffrey Nichols, managing director of New York-based American Precious Metals Advisors, also sounded a positive note for long-term gold investment last week.

He explained in an interview with the Daily Telegraph that the current price of the yellow metal represents an excellent buying opportunity.

"From a long-term perspective, gold is a bargain at recent prices in the $900 to $930 an ounce [range] … and will remain so even as it begins to move into a higher trading range," he told the newspaper.

"First and foremost, the bullish outlook for gold rests on the increasing likelihood of accelerating US inflation in the years to come and an associated unprecedented rise in investor demand."

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