3 February 2010 - After experiencing a sell off induced by the record high of November, an anticipated gold bullion rally is currently being hindered by a two-month run by the US dollar. As the dollar continues to perform well against more distressed currencies, gold prices have been experiencing volatility based on speculation and profit taking
Until the strength of the dollar eases, asset based commodities like gold and other precious metals are likely to be in a holding pattern. The good news for investors in these commodities, however, is that indications are that the dollar will have an extremely difficult time holding its gains above 80 on the US Dollar Index, as Monday’s drop to the low 79s indicated. As the dollar falls, it sets the table for a potential rally by gold bullion, rare gold coins and other investments in this precious metal.
Not coincidentally, Monday’s gold prices shot up while the dollar fell, with gold going back over $1,100.00 per ounce on the strength of nearly a two percent gain. What the gold spot price means to bullion is pretty straightforward; when gold prices go up, bullion values go up and when prices go down, so do bullion prices.
The positive part of the equation for investors is that even though the gold rally has begun in earnest, now is an excellent time to add gold bullion to your holdings. Some analysts have predicted gold prices to rise as high as $1,350 per ounce in 2010; such an increase is not unbelievable because it raised nearly $220 per ounce in 2009. An investor who purchases gold bullion now while its price is hindered by the dollar can profit handsomely if it makes gains that are predicted for this year.
