Gold prices 'supported by the credit crunch'

The ongoing problems in the economy, particularly in the US, are acting to support gold prices as investors become concerned with placing their assets into a safe portal.

Some analysts said they remain bullish for gold prices in the long term, reports Bloomberg, with many citing the precious metal's relationship with currencies as the main reason - when the dollar slips, gold prices generally rise.

"Any rebound in the euro or crude oil could see the metal gain further ground. Gold is supported by concerns about financial market weakness, inflation and the ongoing effects of the credit crunch," said John Reade, metals strategist at UBS, one of the world's biggest financial institutions.

Meanwhile, Tom Hartmann from Altravest Worldwide Trading pointed to ongoing geopolitical tensions which he said "brings a little instability to the market and can help gold''.

Russia is said to be disappointed in the US decision to deploy missile defenses in the Czech Republic, which could encourage investors to buy gold.

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