Gold prices tend to move in the opposite direction of the U.S. dollar, as investors use it to hedge against inflation. Dollar and gold are inversly correlated by 70% (approx). As the greenback makes record lows, upward pressure on gold prices has intensified.
Food and Oil are putting extreme pressures on Global Inflation. Central banks are facing dilemma - if they cut rates, inflation rages. If they don't, there is a serious risk of economic slowdown. 'Economic stagnation' combined with 'Inflation stagflation', is a combination gold just loves. World could be in its first stages when gold prices goes up for years together. Real prices of gold (inflation adjusted) is still cheap if we compare with 1980's when it spiked to $870. Generel prices have risen 3 times since then, thus gold at sub $1000 is still really cheap related to everything else. Imagine gold at $2610 in a few years!!
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