Analyst says 'hold your gold'

Gold prices will continue to rise, as long as its three drivers remain in effect, it has been claimed.

According to Bob McKee, chief economist at Independent Strategy, investors in gold should still look to diversify their portfolios due to a number of economic factors, Commodity Online reports.

He said that the main drivers of gold prices are pressure on the dollar, growing political uncertainty and an impending reversal of the liquidity boom and that as long as they are in effect, commodity prices could still rise by a good degree.

In addition, Mr McKee said that some of the worries that were expressed during the commodity rally, including sell-offs by central banks, have been disproved since the banks have no desire to "dump" any more gold.

"We still have some room to go in all three drivers. Assuming that the US economy went into recession this last quarter and knowing that recessions tend to last nine to 12 months, we can expect dollar weakness to continue for at least the next two quarters. Hold your gold for now," he said, according to Commodity Online.

The gold market is currently anticipating Wednesday's interest rate decision, which could see a further rally for commodity prices.

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