Inflation will help gold
helping gold move up, the U.S. dollar fell against a basket of other major currencies, raising dollar-denominated gold prices. Meanwhile, holdings in the largest exchange-traded fund backed by gold hit a new record Monday.
Gold for February delivery was last up $15.40, or 1.7%, at $907.80 an ounce on the Comex division of the New York Mercantile Exchange. It fell 2.4% to close at $892.40 in the previous session.
Gold has been swinging around the $900 mark in the past two weeks, as investors debated the consequences of economic stimulus plans adopted by major economies in the world. While some believe the plans can boost the economy, others think they raise the risk of inflation in the long term.
"Even more pertinent is the real risk that while it may be another short term panacea, it will likely lead to significant inflation or stagflation in the coming months," said Mark O'Byrne, executive director at Gold and Silver Investment
Source
www.marketwatch.com