The latest movements in gold prices vis-à-vis the US dollar and the purchase of IMF gold by India, followed by Sri Lanka and Mauritius suggest that the yellow metal seems to be making a comeback as a reserve standard. However, this is likely to be a temporary affair and once the global economy regains its balance, the lust for gold is likely to wane off.
Gold prices surged to US$ 1200 per ounce recently. Some of the reasons that have led to this surge in gold prices include uncertainty about the US dollar’s strength owing to the weakness in the US economy and the status of the dollar as a reserve currency in the wake of some nations replacing some of their dollar reserves with gold.
President Obama’s recent call to step up America’s war in Afghanistan also seems to have weakened the dollar and strengthened gold. Expected inflationary pressures due to quantitative easing in the US and the UK also seem to cast a shadow of doubt on the value of the dollar le » Read more: Gold Prices: Is The Gold Standard Back?
