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Gold and exchange traded funds that track gold’s price movements offer individuals the opportunity to invest in an asset that retains its purchasing power. After a string of monetary easing policies, many gold traders are expecting their investments to pay off as inflation rears its ugly head.

“It is difficult to ignore the long-term inflationary impact of the recent dramatic increase of our monetary base,” according to Morningstar analyst Abraham Bailin. “Gold is a limited commodity that retains purchasing power even under strong inflationary pressures.”

SPDR Gold Shares (NYSEARCA:GLD) is up 10% year-to-date. Gold prices were trading at around $1,728 per ounce Wednesday. [List of Top Gold ETFs]

The “real impact will come when inflation hits CPI; gold will turn sharply higher on signs of price inflation,” Jeff Wright, precious-metals analyst with Global Hunter Securities, said in a MarketWatch report.

The CPI numbers are set to be released Friday.

However, Fidelity, Vanguard and PIMCO all project moderate inflation for 2012, reports Wes Goodman for Bloomberg.

“Inflation is likely to remain in check,” Joanna Bewick, a portfolio manager for the Fidelity Strategic Income, Strategic Dividend and Income, and Strategic Real Return funds, said in the report. “As long as we’re in this period of getting our economic house in order, I think it’s going to be hard to make the case for an overheating economy.”

“Our base case is for inflation to moderate and trend lower,” according to Pimco

The U.S. consumer price index, or CPI, advanced 3% in December year-over-year. Nevertheless, the long-term inflation outlook is still in gold’s favor.

Other gold ETFs include:

  • iShares Gold Trust (NYSEARCA:IAU)
  • ETFS Physical Swiss Gold Shares ETF (NYSEARCA:SGOL)
  • PowerShares DB Gold Fund (NYSEARCA:DGL)

SPDR Gold Shares

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Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own GLD.