Standard Chartered analyst Dan Smith suggested yesterday (June 16th) that his company has seen a steady flow of Gold Investment interest in recent weeks, Reuters reports.

The yellow metal's inverse relationship with the US dollar has strengthened this year and many observers have advocated buying to hedge against an oil price-led inflation spike.

Now Mr. Smith has explained that these closer ties with the greenback are encouraging investors to Buy Gold as they believe it is likely to suffer from the massive US fiscal response to the recession.

"The correlation with the dollar has stepped up quite a bit in the last few weeks," he told the news provider.

"We have seen some quite good interest from investors as well. There has been quite a good uptick in terms of net speculative positions … I think that is generally supportive for gold and it suggests the downside is quite limited."

Those comments come after Davenport and Company revealed last week that it had upped its gold price forecast for the next three years.

"We are raising our short and medium-term Gold Price forecast to $940/oz in 2009 (up from $925/oz), $1,025/oz in 2010 (up from $1,000/oz), and $1,100/oz in 2011 and 2012 (up from $1,000/oz)," an analyst from the firm told StreetInsider.com.

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