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Gold Prices can rise 'in a deflationary economy'

A senior figure at US Global Investors has claimed today (September 23rd) that Gold Prices will continue to rise regardless of economic developments, Reuters reports.

The yellow metal is often bought by investors as a store of wealth in tough times, but it also has the ability to provide a hedge against inflation when markets begin to boom.

Frank Holmes, CEO and chief investment officer at the commodities-focused fund manager, has explained that anyone Buying Gold should have no worries about the future.

"Gold's rally primarily was driven by its inverse relationship with the US dollar," he told the news provider.

"[It] could still go higher in [a] deflationary economy because of currency devaluation as a result of deficit spending and a strong resolve to keep interest rates negative."

Those comments come after Standard & Poor's, a major financial services company renowned for its stock market indexes, also sounded a positive note for the future of gold prices.

The group's global investment policy committee predicted in an interview with the Wall Street Journal last week that the metal could reach $1,500 per ounce in the next year.

"After falling to $700 in early November 2008, the price of gold is now retesting the $1,000 level," it told the newspaper.

"Should prices break strongly above the $1,000-an-ounce area, we think prices could rise to the $1,200 to $1,500 per ounce [range] over the next nine to 12 months."

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