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Gold hits record high as dollar falls

The price of gold hit just under $1112 today to mark an all-time high as the dollar tumbled and investors decided on a safety first tragedy by investing in gold. Gold has for many years been seen as a counter cyclical investment which does well in the bad times but not so well in the good times. It will surprise many to see the price hit a new all-time high when you bear in mind the renewed optimism regarding the worldwide economy and the US economy in particular. So what is happening?

The problem seems to be that governments around the world have indicated that interest rates will remain low for the foreseeable future which would suggest a relatively slow worldwide economic recovery, something which will surprise many people. While inflation is at the moment under control there will be a need to spring into action if the rate rises to uncomfortable levels at which point we may see a switch from gold into other investment instruments.

In many ways we are seeing a situation where we take two steps forward and one step back with regards to the worldwide economy but generally it looks as though the worst is over and hopefully the worldwide economy can begin to build from a firmer base.

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