March 22, 2009

Speculators forecast Gold May Rise on Demand for Dollar Alternative

Gold may extend its rally for a second straight week as the slumping dollar boosts demand for the precious metal as an alternative investment.

Twenty-one of 28 traders, investors and analysts surveyed from Tokyo to Chicago on March 19 and March 20 advised buying gold, which rose 2.8 percent last week to $956.20 an ounce in New York. Five said to sell, and two were neutral.

Last week, the dollar dropped 4.8 percent against the euro, the most since December. Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, has jumped 41 percent this year to a record.

Most traders surveyed on March 12 and March 13 have expected gold’s gain last week. The survey has forecast prices accurately in 151 of 254 weeks, or 59 percent of the time.

Platinum already broke $1100 level while Silver is steady at the $13 mark for the meantime. Precious metal prices have been volatile for these past weeks, even though investors ascertained that still, these are the safest investments in the time of depression.

Rumors are spreading that the dollar is beginning to exhibit weakness amid peculation that it may no longer claim the title as the world's top reserve currency.

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