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Weaker US dollar 'should boost gold investment'

An analyst at troubled US firm Citigroup has explained today (December 2nd) that the prospects of a weaker dollar are keeping demand for gold investment strong, Reuters reports.

Gold has been trading at lower levels since it hit a record $1,030 per ounce in March as inflation fears led investors to seek solace in the yellow metal's safe-haven qualities.

However, David Thurtell, from the second-largest financial institution in the US, has claimed that the dollar - which enjoys an inverse relationship with gold - will suffer next year.

He told the news provider: "We think the US dollar has gone a bit too high and we see it falling back again through 2009.

"Mine supply is also quite constrained, even though most mines are still quite profitable. And investment demand is still quite strong."

Mr. Thurtell's comments have been strongly corroborated by Nicholas Watts, an independent financial adviser with Positive Solutions Financial Services.

Writing in the Belfast Telegraph yesterday, he explained that there is no reason to suggest that the bull run experienced by gold in the last decade cannot be continued for a number of years to come.

"If you look at the longer picture - say the last ten years - gold has risen 149 per cent which, being nearly five times inflation, is maybe not such a peripheral asset consideration after all," he said.

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