The weaker (gold-dollar) correlation late last year and early this year was due to the overwhelming enthusiasm among the speculative community to drive prices higher.

Price dynamics in gold next year will continue to be largely determined by speculative interest, backed by a myriad of justifications like inflationary risks, energy-price led economic slowdown, expectations of a US dollar correction, soaring physical demand, supply-side constraints, hopes of large scale central bank buying and so on.

We believe that the fund interest in silver is built upon a much narrower base of investors than gold, leaving it more vulnerable to big price moves in either direction.

With a lack of fresh catalysts to trigger a significant move in either direction, we expect gold to remain in its consolidation mood over the near term.

More seriously, China's economy would take a big hit if the US dollar weakened sharply due to such factors as a bursting of the US property bubble. The loss for China's foreign exchange reserves would be extremely serious.

We've seen gold break the correlation with the dollar in recent times. We saw gold strengthening even though the U.S. dollar was strengthening.