Short-term correction flagged

       Gold experts caution investors to be wary of a short-term correction, even as prices for the precious metal continued to rise yesterday on concerns about the US dollar's depreciation.
       Gold prices in Hong Kong were quoted at $1,055 to $1,056 per ounce, up from Monday's close of $1,049 to $1,050. In the local market, buying prices were fixed yesterday at 16,550 baht per bahtweight (15.16 grammes), up 100 baht from Monday, according to the Gold Traders Association.
       Satit Wannasilpin, managing director for GT Wealth Management, said gold prices could test $1,150 in the short term as investors sought a hedge against the depreciating US dollar.
       Demand for gold from investors in the Middle East seeking an alternative investment to dollar-denominated assets is also driving metal prices upwards.
       Mr Satit said many countries have cut back their holdings of US dollar assets in their reserves for fear of further dollar depreciation.
       The US dollar now counts for less than 50% of international reserves, compared with an average of 60% five years ago and about 80% earlier this decade,he said.
       "Many countries are reducing their USD holdings in their international reserves in exchange for gold. But if the global economy continues to recover,we may see a decline in gold prices on cyclical factors," Mr Satit said.
       He said gold was unlikely to fall under $1,000 per ounce in 2010.
       Kritcharat Hirunyasiri, president of MTS Gold, said investors should consider taking profits with the runup in prices.
       Gold this week should trade between $1,030 and $1,060 per ounce, he said. If prices stand above $1,030 for a week,then technical factors could push prices to test $1,100."In any case, investors who are investing in gold futures should raise their reserves to 100,000 baht per contract from 70,000. The extra 30,000 baht will help serve as a cushion in case prices decline," said Mr Kritcharat.
       Gold futures traded on the Thailand Futures Exchange are set for 50 bahtweight of gold per contract. Mr Kritcharat recommended that investors should closely monitor price trends, and revise their strategy if prices fall by more than 300 baht per baht-weight as margin calls could result in a sharp slide in prices.
       The Futures Industry Club, meanwhile, has agreed to introduce a new futures contract for 10 baht-weight starting in the first quarter of 2010. Brokers also want to extend trading hours for gold contracts to midnight, resulting in an overlap with New York trading hours.