Even if, there’s an inverse connection between the trade weighted U.S. greenback and the price of gold, it is significant to understand that it’s likely for the U.S. dollar and gold price to increase at the same time.
On September 8, 2016, gold prices increase a little in Asia following China trade data presented an unanticipated increase in imports.
Delivery of gold for December on the Comex division of the Nymer increase 0.11 to $1,351.05 a troy ounce.
While the greenback glided lower compared to the other major currencies and re approached a one and a half week lower as investors rotated their focus to the European Central Bank’s upcoming policy statement.
The euro bound near a two week peak against the dollar, with traders expecting for a European Central Bank policy decision that others are doubting will have any important influence on the euro, even if monetary policy is eased further.
The investors are concentrating on whether the European Central Bank will lengthen its asset purchase program further than March 2017, and whether it will pull the program to ease supply shortage concerns.
The world's 2nd biggest buyer of the precious metal behind India, China reported a trade balance surplus of $52.05 billion, slimmer than the $58.00 billion met for August with exports down 2.8 percent, less than the 4.0 percent plunged seen YoY, and imports increase 1.5 percent, beating an anticipated 4.9 percent decline and making the 1st increase in 22 months as worldwide commodity prices presented indications of a recovery. Suddenly, gold prices slightly changed close to a three week peak in North American trade on September 7, as investors concentrated on the next schedule of U.S. data and Fed speakers for additional guidance on the schedule of the next interest rate hike.
The latest string of unsatisfactory data, all but limited talk about the short term rate hike from the Fed Reserve. Investors are pricing in a 15 percent possibility of a rate hike at the Fed's September 20-21 meeting. And the others are hoping for a rake hike happening in December of 2016.
Gold is sensitive to moves in U.S. rates. A slow trail to higher rates is seen as less of a threat to gold prices than a swift series of surges.
Gold was going down ever since it reached $1375. It made an effort to reach those peaks again in July, but did not make it. As an alternative, the bears took control again, causing a decline to as low as $1302.40 the previous week, breaking the previous low at $1310.70.
Will the Dollar make it again on top, or will the Gold keep increasing or back down? With the struggle of the greenback hoping to get back on top again, still is pretty unpredictable, but U.S. Dollar never stay low that long, so maybe a bullish is happening soon!
For the Gold, It might keep shining and stay on top! Dollar and Gold, Bullish for both?
Since the U.S. dollar is determined by many factors just like monetary policy and inflation in the U.S. vs. other countries. It’s also motivated by economic prospects in the U.S. vs. other countries. Investors need to consider all of these factors.
When the U.S. dollar begins to drop its value, investors look for alternative investment sources to stock value and gold is a very good alternative. It is important to get a wisdom of the direction that gold prices will take. Also keep in mind, gold prices tend to fluctuate, especially during election years.
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