Forex Investment and Currency Trading

Gold prices have rallied 40% from late October lows. Traditionally, gold is thought of as a hedge against inflation. The spectacular rise in gold prices during the inflationary 1970s cemented conventional wisdom about the strong positive link between rising inflation and gold prices. Can this explain the substantial rise in gold prices over the past four months? Expected inflation (as measured by the spread between the yield on US 10 year Treasuries and 10-year TIPS) has risen by over 200bp since late November and over a 100bp since late October. So there is a case to believe that gold has [...]

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Gold
The gold price finally broke above the magic USD 1,000/oz level in mid-March, as a combination of extreme weakness in the USD and fear about problems in the US banking sector resulted in a rush into safe haven assets. However, the price fell sharply after this, hitting a low of USD 904/oz at one point as some of this money was withdrawn. This recent reduction was largely driven by investors being forced to liquidate gold holdings to offset loses elsewhere, rather than indicating a fundamental reassessment of gold’s prospects. Physical gold demand should be boosted by this recent price fall, [...]

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