Keep Your Eye on Gold

So says BMO Capital Markets economist Bart Melek, who predicts that in the next three years, gold will be a strong performer in the forex market, although the bullish trend may not come into full effect until later in 2009. Following the announcement by the U.S. government regarding its latest efforts to revive the economy by shoring up credit markets and buying up toxic assets from banks, both gold and silver rose the most in weeks on concerns that the plan will prove to be insufficient and promote inflation. This may be a premature precursor to the larger-scale rally that Melek has projected, but it signifies that investors are interested in using gold as a hedge against USD weakness. Depending on where the greenback moves in coming months, we may see Mele’s prediction come true, or gold may break out of its historically inverse relationship with the USD in online forex trading.