Excerpt from: GFT Analysts in the News
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| January 28, 2009 | | When will the gold/dollar relationship go back to "normal"? |
Over the past few months, we have seen something very interesting in the relationship between gold prices and the U.S. dollar in forex trading: They no longer move opposite to each other.
This is because in this time of economic turmoil, the dollar, like gold, is being viewed as a safe haven. Now gold and the greenback are moving generally in the same direction.
But how long will this last?
As the U.S. economic stimulus moves through Congress, things could change. The influx of greenbacks could reduce the value of the U.S. dollar in forex trading, while at the same time increasing demand for a hedge for inflation -- gold.
Even though deflation is the main concern right now (another reason gold demand may be lukewarm), at some point in the relatively near future the issue will switch to inflation. And gold may see a rebound then.
| Topic Tags: economic stimulus, forex trading, gold futures, gold prices, greenback, spread bets, spread betting, U.S. dollar | |
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