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Thursday, 9th November 2006 (5400 views)

Following the Democrat's poll victory in the US, gold prices in Asia increased amid speculation that this could now impact on the dollar.

Should the dollar decrease in value, some will turn to gold as a source of alternative investment, thus strengthening its appeal.

In Mumbai, gold for immediate delivery was reported to have risen to a high of $618.90 (£324.48) per ounce and then traded a little under this at $618.10 (£324.06) at 11:32 local time.

Now that the Democrats control the House of Representatives and appear to be close to controlling the Senate, Stephen Orr, chief executive officer of Oceana Gold, predicts that a divided government may "destabilise the dollar".

Speaking to Bloomberg, Mr Orr went on to state his opinion that: "The gold price will be strong for the next two years."

Allied to this, Ron Cameron, resource analyst at Ord Minnett, told Bloomberg he believes: "Gold is still trading on the back of dollar in the short term."

 

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