Gold: This Commodity Loves Economic Upheaval
When the dollar goes down, gold goes up. While nothing in the financial world is a slam-dunk, this is about as close as you can get. The two have shared an historically inverse relationship to each other for years – and this was evidenced yet again recently.
As gold prices hit an 18-month high of $1,025 per ounce on September 17, the Dollar Index (which measures the greenback’s strength against six other world currencies) quickly slid to its lowest level in a year just six days later.
And quoted in Bloomberg on Monday morning, Ralph Preston of Heritage West Futures Inc, says: “The dollar still looks like a ripe apple about to fall.”
If he’s right, this could send gold higher again, as the metal snapped a four-day losing streak on Monday – part of a pullback that saw the metal shed almost 2% of its value last week and dip below $1,000. Nevertheless, gold has risen by about 12% this year, as investors continue to look to the traditional safe haven for shelter against a tepid economy, unemployment, the prospect of rising inflation, and geopolitical issues.
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