Gold Is Soaring, Again!

The price of gold has soared almost 40% since October and we are getting closer to the $1,000 level exceeded during March of 2008. What can be behind this sudden rebound in the value of precious metal?

Last year, the price surge in gold was mostly driven by inflation fears (gold is widely considered as a hedge against inflation) and by the weakness on the US dollar against other major currencies (gold is priced in U.S. dollars). But since then the situation have changed. Inflation seems to be under control and the value of U.S. dollar has risen during the last few months.
The safe heaven appeal of the yellow metal may be behind the recent up trend. In fact, the recent deterioration of economic conditions around the world, the transfer of financial risk to governments, the increasing risk of sovereign default, low interest rates and falling stock markets make gold very attractive to international investors., Bloomberg
2/24/2009 8:01:18 PM