An analyst at the largest bank in Africa has claimed that dollar weakness is likely to support Gold Prices in the long term, Bloomberg reports.
The yellow metal's recent rally above the psychologically-significant $1,000-per-ounce mark was largely motivated by the struggling greenback, with which it shares an inverse relationship.
Now Walter de Wet, a London-based employee of Standard Bank, has explained that this trend looks set to continue after strong Gold Buying support was found just below four-figure territory.
"It's mainly dollar-driven [and] in the longer term, we still expect more dollar weakness," he said in a phone interview with the news provider.
"When we approached the mid-$990 level, there was some physical buying coming in and providing some support."
Those comments come after another major bank, British institution Standard Chartered, also added its name to the list of companies and analysts predicting a strong future for gold prices.
In a note quoted by Reuters, it suggested that the relationship between gold and the dollar has strengthened and is likely to see the former hit record levels in the remainder of 2009.
"Currency movements will be the principal driver for gold and the impact of the US dollar seems to have regained its prominence, despite a number of potential obstacles," read the note.
"With the US dollar likely to weaken further, gold should average $1,050 an ounce in Q4."
Courtesy: www.bullionvault.com
