Military action in the Middle East and North Africa has prompted analysts from Standard Bank Plc, MF Global and Shanghai CIFCO Futures to forecast higher prices for gold. Allied forces are expanding their military air campaign against Libya in an effort to protect its civilians, adding to the tension level in Middle East and North Africa. Also, Yemen’s President Ali Abdullah Saleh suffered recent defections of generals and ambassadors as people in Yemen rebel against his regime.

Gold prices stabilized on Wednesday as the global markets considered the long term implications of the ongoing crisis in Japan. Analysts from Vision Financial Markets, Standard Bank Plc, and Barclays Capital described yesterday’s pullback in gold (alongside other markets) as a short term over-reaction to a crisis that seemed to bring worsening news by the hour.

The recent spike in food and oil prices has made the threat of inflation more acute globally, but monetary policy is still widely varied from country to country. A top European central banker said rising energy costs were posing a threat to both emerging and advanced economies. But a U.S. Federal Reserve official said more stimulus may be needed to keep lofty oil prices from dragging down the U.S. economy.