Inflation 'will underpin' long-term Gold Investment

A senior figure at Killik claimed yesterday (September 9th) that inflation will underline the value of making a Gold Investment for years to come, the Daily Telegraph reports.

Gold Prices topped the $1,000 per ounce mark on Tuesday before dropping back slightly, prompting investors to question the next major move for the yellow metal.

However, Mick Gilligan, head of research at the private investment advisor, has explained that buying gold as a hedge against inflation is a sound long-term bet.

"We are looking at years, not months but there are real fears inflation will be an issue again," he told the newspaper.

"Gold has always been seen as an insurance policy again inflation, as it tends to keep its value when dollars, pounds or euros are losing their buying power in real terms."

Meanwhile, Citigroup, which has the world's largest financial services network, has increased its gold price forecasts for this year and 2010.

The bank now sees the metal at an average of $940 per ounce in 2009 (up from a previous estimate of $908) and an average of $966 per ounce in 2010 (up from $925).

"We expect the US dollar to continue on a weakening trend. This will be the main plank of price support," it said in a note quoted by Reuters.

"Any return of heightened risk in finance markets will boost gold prices."

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