Gold will glitter in the long run

Shanghai (CNS) -- Market insiders remain positive about the long-term potential of gold prices in spite of the recent drop, CNS reported on Tuesday. The international gold price fell to around US$ 1550, a dip of 5 percent in two weeks.

The flagging price results from a stronger U.S. dollar and thus the fear that the weaker euro might cause another credit squeeze and a slowdown in market liquidity; on the other hand, price declines in raw materials and basic metals can keep commodity currencies from bouncing up in the short run, said Senior Vice President Wong Leung-Heung with the Development Bank of Singapore.

Gold is the best alternative to currency and increasing gold holdings will become a major trend if recent market observations are any indication, added Wong.

A Hang Seng Bank report also asserts that the loose policies of the U.S. and Europe's debt problems will stimulate the demand for gold and reduce the risks of a price slide in the precious metal.