Sunshine Profits

Mounting social and political unrest in the Middle East boosted appeal for commodities as a safe investment option in recent weeks.

High volatility seen in commodities market in the past week attributes toward ongoing social and economical developments in the Middle East.

Irrespective of the concerns over financial tightening, talks of a gold bubble and economical weakness, gold marked its tenth straight annual gain in 2010.

As per the World Gold Council, precious metals demand will stay high this year with growing Indian and Chinese appetite for the yellow metal, but fresh buying in developed markets of jewelry will depend on economic outlook.

Inflation vs. market fluctuations is always a hot topic in precious metal markets. Inflation is good for gold, which has a long history of acting as a hedge against it.

Political as well as economical developments around the globe, especially in the Middle East, have affected the commodity markets during the previous week.

Political and social unrest in the Middle East was the most discussed topic during the week. Restlessness and riots could inflate food prices in the region and worsen the economic balance further.

While a majority of investors, analysts and experts dwelt on gold and (to a lesser extent silver) in 2010, sister precious metals platinum and palladium notched up significant gains matching gains in the investment safe havens

In a move that provides a glimpse of the future of US dollar and gold, China has allowed its currency to be traded for the first time in the United States. This is a bullish sign for gold investors.

January has been a tough month for gold. From its year-end 2010 price of $1,420 an ounce to its recent low just over $1,320, gold has lost some $100 – about seven percent.