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Weaker dollar highlighted as boost for Gold Prices

A senior figure at UBS Securities Asia has claimed today (September 15th) that pressure on the US dollar could prove beneficial for anyone with a Gold Investment, Bloomberg reports.

The yellow metal, which shares an inverse relationship with the greenback, has advanced about 30 percent since the collapse of Lehman Brothers Holdings this time last year.

Now Ghee Peh, head of Asian mining research at the firm - which is a division of Europe's second-largest bank - has explained that further dollar weakness should see Gold Prices move higher.

"The rally was due mostly to concerns about financial systems," he told the news provider.

"Now, with the US dollar's weakness, gold is going up again. An increase in dollar supplies mean more upside risk for gold."

Those comments were strongly backed up last week by BMO Capital Markets, which is a division of BMO, the fourth-largest bank in Canada.

In an analysts' report quoted by the Daily Telegraph, the group predicts that sentiment towards gold investment will remain strong until at least 2011, with prices possibly hitting $1,300 per ounce.

"The metal will likely be energized again late in 2010 amid a weakening greenback and rising inflation concerns, as the US economic recovery takes root and as post-recession growth becomes entrenched," read one section, according to the newspaper.

"At that time, risk-taking should accelerate and with it BMO Research expects a weaker dollar as capital increasingly moves away from the safety of the treasury market."

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