Central banks' Gold Investment outlook set to influence market

The changing attitude of central banks towards gold could act as a boost to the market, it has been suggested.

Axel Merk, portfolio manager of the $415 million Merk Hard and Asian Currency Funds in California, noted that central banks are now less inclined to sell their gold reserves than they once were, Reuters reports.

Meanwhile, some central banks in Asia have taken to Buying Gold to increase their reserves.

According to Mr. Merk, this is in recognition of the uncertainty surrounding currencies such as the dollar in the economic climate, with Gold Investment often seen as a safe haven in times of economic difficulty.

"In the current environment, it is just too obvious that gold has an important function in the monetary system," he told the news provider.

"We just don't know what would happen to currencies in this environment."

Deutsche Bank's Michael Lewis suggested that the price of gold could be pushed even higher by continuing dollar weakness.

"The major forces that are affecting gold are the dollar on the one hand and ETF flows on the other," he said in a Reuters interview.

"There are definitely risks that the dollar could go even weaker. The dollar could still be moving lower throughout next year."

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