The year 2010 saw the metamorphosis of gold from a commodity to a currency, according to analysts. As global currencies weakened in the wake of an influx of unprecedented stimulus and ultra-liberal monetary policies gold extended its bull ride to finish the year with a 30 percent gain.

The year gone by also witnessed heightened activity in gold ETFs and set off a new trend of gold vending machines, emphasizing the attractiveness of the yellow metal in uncertain times.

Gold prices rose $325.72, or 29.7 percent last year, marking 2010 as the best year for the gold rally since 2001. Gold stocks also were on steroids last year, as is evident from the 33 percent rise of the Market Vectors Gold Miners ETF (GDX). During nine out of twelve months last year, gold prices recorded gains and are now on a five-month winning streak.

Will gold's golden run continue in 2011? Analysts believe it will. ... the situation for gold has moved from a slightly bearish sentiment to a bullish outlook for the near and medium term, according to Daily Market's Przemyslaw Radomski.

Radomski reasons that the renewed bull sentiment in the stock markets will have a positive bearing on gold and other precious metals.

Even though the economy is still rather weak, the stimulus money finds its way to the stock market, which helps pushing prices higher. This goes double for precious metals as investors find them particularly valuable during such inflationary periods.

He also says that though the coefficients between precious metals and stocks continue to weaken, they are still significant and that gold has been largely moving along with the S&P 500 index. This means that for precious metals analysis, we must continue to take stocks into account. In addition, bullish sentiment for the general stock market likely implies the same for gold, silver and mining stocks. Consequently, it means that the fact that stocks are now visibly above their key support/resistance level is bullish also for precious metals, he writes.

However, he also cautions that 2011 will also be unpredictable to a large extent. At this time, it seems best for investors to stay with current holdings and – again – perhaps open small speculative long positions, he cautions.