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February 7, 2010 – Following a strong run by the US dollar, gold pricing and demand have adjusted and gold investment looks to be ready for a rally. A number of factors are in place that continue to bring optimism of higher prices to analysts, suggesting that the recent run by the dollar is nearly at its end.

Many analysts agree that gold prices are in a long-term cyclical bull market that will continue to push prices higher. While gold prices have risen over 150% in the past five years, the Dow Jones has been flat during the same time period and the dollar’s 52-week high occurred back in March, 2009.

Another factor has been the type of current buying that is occurring. While small traders and investors can be motivated by fear to get out of the market, institutional buyers, national central banks and technical buyers have been buying even during the rally by the dollar. Smaller traders have run from the downturn, but big investors have been running to buy the resulting lower prices.

Finally, demand is still outpacing supply. Although China reported record gold production in 2009, worldwide production has been flat or falling for the past several years. This stands in stark contrast to the ever-increasing worldwide demand for the metal. Economists agree that rising demand and flat or falling supply almost always mean higher commodity prices.

While falling prices may alarm some investors, most see the recent events as being potentially beneficial to gold investment. After adjusting, many believe that gold investment is going to rally for a strong 2010.

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Stewart Lawson

Senior Staff Writer - Gold-Investment.info