"Gold prices generally rise during times of actual or projected inflation because of gold’s traditional status as a “safe haven” asset. Gold buyers seeking an asset which reacts favorable to inflation or currency devaluation often move from the falling currency into gold.
Currently, the Federal Reserve is more concerned with deflation than inflation and, as suchh, as shown little reluctance to flood the U.S. economy with more dollars. In contrast, countries like China and India are seeing relatively strong economic growth and, with it, higher inflation. China’s prices are 5.1% higher than a year ago, while India is projecting inflation will be 5.5% by March 2011." Read more. "Inflation and Interest Rate Trends Look Positively for Gold in 2011"
International Business Times, December 27, 2010. Image by Filomena Scalise / FreeDigitalPhotos.net.