Investors generally buy gold as a hedge against economic, political, or currency crises (including investment market declines, burden of national debt, currency failure, inflation and war). The gold market is subject to speculation especially in the futures contracts and derivatives. The history of the gold standard, the role of gold reserves in central banking, gold's low correlation with other commodity prices, and its pricing in relation to currencies during the financial crisis of 2007–2010, suggest that gold behaves like a currency than a commodity.
According to an article published in the NST (Friday 8, July 2011) titled "Good Gains from Gold" investment in gold seems to provide an annualized return of 13% over the next three years and should peak at US$2,100 per ounce in 2014.
Economists are bullish on the outlook for gold and there are a few factors contributed to this sentiment. An expected of stronger of economic growth in China and India providing a boost in consumers demand for gold.
Another reason for this bullish was the global central banks are increasing their gold reserves and become net buyers of gold whereas in the past they are net supplier of gold.
Abd Rahaman Rasid
Abd Rahaman Rasid
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