Tuesday, January 29, 2008

Gold Is Safe Heaven During Volatile Markets

Gold is making new heighs every day and is currently trading at U.S.$934.20 per ounce. This is due to extreme pessimism among equity traders/investors after recent very sharp selloff, also aiding is weak U.S. dollar, along with high inflation and high crude oil prices. Traditionally Gold is considered to be safest during weak, volatile and uncertain financial market conditions. This rally in Gold can take it closer to U.S.$1000 per ounce mark if stock markets sentiment doesn't improve. Gold is also a hedge against inflation and risk, that's why it's finding so much favour among market players. Yesterday Dow Jones rose sharply with the hope that U.S. Fed will again cut interest rates in order to contain it's sagging economy, and with that comes the probability that U.S. dollar will again become weak and hence Gold will rise in value. Central banks have again started buying Gold as an alternative asset in order to counter balance weak and volatile currency basket they hold in their portfolio and hence no major selling pressure from large institutions. Gold is an absolute must in everybody's portfolio if he/she wants truely a well diversified asset portfolio.