The head of a major asset management firm claimed yesterday (December 18th) that gold prices are set to rise as the US dollar is in line for a significant correction, Reuters reports.
Gold fell from record highs of $1,030 per ounce in March as the dollar - with which the precious metal tends to share an inverse relationship - strengthened on cooling inflation fears.
However, the recent substantial pouring of funds into financial markets in order to save ailing institutions has led Frank Holmes, CEO of US Global Investors, which manages around $2.3 billion worth of assets, to champion buying gold.
He told the news provider: "Gold is starting to move as a monetary asset. With all the printing of money taking place in the US, the dollar, which has gone parabolic on the upside, is due for a correction and gold is now responding to that."
Mr. Holmes' comments were backed up last week by Goldman Sachs, the world's fourth-largest bank holding company, who upped its three-month, six-month and 12-month gold price forecasts.
One section of a research note issued by the firm read: "We are raising our gold price forecasts in line with Goldman Sachs economists' currency revisions toward a weaker US dollar outlook."
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