Gold prices to set record highs in 2012 by Shan Saeed

Gold prices may be off from highs seen earlier in 2011 but get ready for a rebound because gold is set to soar again and may break records in 2012. Gold prices broke records in 2011, shooting to over $1,923/oz on 6th September although they have fallen by about 16 percent more recently. Gold appreciated 12% in 2011. As the prognosis for U.S. recovery looks better, the outlook for Europe looks even worse. That scenario allowed the dollar to resume its status as a safe haven asset that it lost amid economic uncertainty, which sent investors running to the yellow metal on fears the dollar was getting too weak. Dollar is a bubble which might bust going forward. Chinese yuan is the next global currency. All big investors are placing bets on Chinese yuan since its appreciation is on the rise for the last 5-years

While Europe [ esp PIIGS] debt crisis looks increasingly worse, investors will still run to dollars early in 2012, but watch out for gold bugs jumping back in later in the year, when inflationary pressures rise in the U.S. as a side effect of loose monetary policies over the last couple of years. Although investors are currently not focused on an inflationary environment, longer term I believe with the amount of stimulus injected globally and higher inflation expectations will continue to support investment demand in gold. Others agree that as long as bad news seeps in from Europe and while the U.S. recovers amid a sea of inflation-fueling liquidity, gold will rise again even if at a more modest pace. The gold price is primarily supported by investment demand. Investors look to gold as a safe haven and the limited supply of the metal could push prices to very high levels in 2012, potentially exceeding $2,000 in the next six months

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.