The price of gold bullion is notoriously volatile and 2009 has been no exception. The current financial crisis has seen further fluctuations as buyers have rushed to acquire gold bullion as a safe haven but also sold the precious metal to cover losses in other markets. During the year, gold prices hit record highs when global economic factors had an impact on demand where investors looked to seek a safe haven from weakening currencies and fears of inflation. In February, gold bullion prices breached $1000 an ounce amid fears that the US government might be forced to nationalise some of the country's biggest banks just days after Barack Obama signed a $787bn stimulus plan into law.

In April, China almost doubled its gold reserves from 600 tonnes to 1,054 in a bid to move some of its large amounts of foreign reserves ($1,954bn) into a more secure asset signalling a revival of gold bullion after years of fading importance. The second half of 2009 saw record milestones in the price of gold bullion, not only breaking $1000 an ounce but also hitting an all time record high of $1060 in October and $1226 in December when the IMF decided to sell half of a 400 tonne allocation to India. For the first time in 21 years the worlds central banks have been net buyers of gold bullion. Smaller emerging economies such as the Philippines, Kazakhstan, Sri Lanka and Mexico have also been shifting their reserves into gold.

Dylan Grice, an analyst at Societe Generale, said recently: "Central banks aren't known for their investment acumen. Some commentators have mockingly suggested that India's decision to buy 200 tonnes of IMF gold signals the top of the market in the way that heavy selling by the UK signalled the bottom in 1999."

However, Mr Grice believes that the continued weakness of the dollar, concern about inflation and fiscal policy will continue to drive the gold price.

Jeffrey Nichols, managing director of American precious metals advisors believes there is more to come from gold prices in 2010 "Despite a recent correction, the four pillars of gold-price strength remain intact. These are Central bank reserves buying rather than selling gold in 2009; inflation-fuelling US monetary and fiscal policies; expanding retail and institutional investor participation in the United States, China and around the world; and declining world gold-mine production.

Looking ahead to 2010, don't be surprised to see gold at $1500 or higher by the end of the year" Ted Scott, the director of UK strategy at F&C Investments also commented "the only way that gold can underperform is if the US and other developed economies recover in a conventional way by cutting spending and raising taxes while at the same time embarking on a period of stable economic growth."

Given the significant economic challenges ahead, a fragile recovery appears more likely in the long term. Assets like gold bars and coins will remain an attractive investment in such an uncertain environment.