Dollar devaluation 'will boost gold bullion demand'

An analyst has urged investors to hold onto gold as he believes a devaluation of the dollar is imminent, the Hindu reports.

Gold is seen as a safe investment when the dollar declines, and its position as a haven for investors has been entrenched by violence in the Middle East, where Israel has launched attacks against Hamas following the sustained firing of rockets into its territory from the Gaza Strip.

According to John R Ing of Maison Placement, Canada, the value of the dollar is likely to fall even further in the near future, providing investors with an added incentive to buy gold.

In an interview with the news provider, Mr Ing said his prediction that the dollar would weaken was based on fears surrounding the level of U.S. debt.

He also noted that the price of gold was likely to rise due to supply shortages.

Mr Ing's view was backed up by John Browne, Senior Marketing Strategist for euro, who said a devaluation of the dollar against gold is likely to occur sometime in 2009.

Tom Pawlicki, precious metals and energy analyst at MF Global, told Reuters recently that more people would invest in gold as the dollar continues to depreciate against the euro.

"It's a reflection of the safe-haven flows when people are willing to get zero percent in returns for a three-month commitment from the government. It's just an indication that the prospect of the economy is weak," he told the news provider.

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