A look at what will happen next in the world economies
Wednesday, April 15, 2015
Gold Prices Held Down by a Stronger Dollar
Amazing how we said the world was ending in 2008 and it has not. Aivars Lode
By Tatyana Shumsky
Gold prices pulled back below $1,200 an ounce on Monday as a stronger dollar overwhelmed interest from foreign buyers.
The most actively traded contract, for June delivery, fell $5.30, or 0.4%, to settle at $1,199.30 a troy ounce on the Comex division of the New York Mercantile Exchange.
The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, was recently up 0.2% at 88.35 as the dollar neared a 12-year high against the euro. Gold is traded in dollars and becomes more expensive for buyers in other countries when the greenback strengthens against their home currency.
Gold denominated in euros rallied to a 2½-month high, trading at €1,139.20 an ounce.
Still, noted Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago, “There’s a lot of support here despite the move in the dollar.”
Negative bond yields in Switzerland and other European countries are burnishing gold’s appeal to investors there, Mr. Haberkorn said. Gold doesn’t pay interest or dividends and has an easier time competing with yield-bearing assets when yields are negative.
Gold is seen as a store of value and a currency alternative by some investors, who buy it as a haven from those risks. Europe’s recent efforts to jump-start economic growth have focused on pumping cash into its financial system. Some traders worry this will further erode the value of the euro and have been buying gold as a hedge.