Housing market 'could be good for gold'

The shaky housing market in the US could help to support long-term gold prices, one analyst has predicted.

According to Justice Little, editorial director of the Taipan Financial Group, investors will seek to buy gold as a hedge against inflation due to rapidly declining house prices.

He told Commodity Online that there are likely to be more difficult conditions ahead, which could spark increased inflation.

"[There] is more evidence that consumer pain is near the start rather than the finish. That's good news for gold and bad news for the US dollar. It's also something Wall Street hasn't fully priced in yet, which means there's still plenty of upside for gold," Mr Little said.

In May 2008, a spokesperson for the World Gold Council commented that gold and oil have a "magic relationship" which could see prices for the precious metal rise past $1,000 an ounce again during 2008, reported the National newspaper.

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