US Dollar Fears Could Drive More Investors to Gold

Concerns about the US economy look set to ensure the dollar remains relatively weak, paving the way for further investment in gold.

In an interview with Bloomberg, Shaun Osborne, chief currency strategist at TD Securities in Toronto, said that the chances of the dollar gaining strength were slim given the current position of the US Federal Reserve.

This could prompt more people to buy gold as a weak dollar increases the appeal of bullion as an alternative investment vehicle.

"With the Fed reverting to non-conventional monetary policy, the whole notion of a strong dollar goes out the window," Mr. Osbourne confirmed to the news provider.

"The risks are skewed to dollar weakness."

Prior to the Fed's latest rate cut, Afshin Nabavi, head of trading for MKS Finance, noted that any fall in the value of the dollar would naturally have a positive impact on the price of gold.

"Everyone is banking on a lower interest rate in the US," he told Reuters.

"If the dollar continues to lose value, of course it will benefit gold."

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Goldbug, 31 Dec '08