Gold pushes back over $2000 on persistent dollar deterioration
Gold pushes back over $2000 on persistent dollar deterioration by Michael J Kosares for USA Gold
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Gold pushed back over the $2000 mark in overnight trading with persistent deterioration of the U.S. dollar the principal influence. The greenback was down for the fifth day in a row and at its lowest level in two years with a sharp decline against the Japanese yen leading the way. Gold jumped $40 yesterday and it is up another $28 today at $2015. Silver is up 87¢ at $28.29 after a 90¢ rise yesterday.
Addressing the recent brief drop in the gold price from the $2070 record high to near $1900, Bloomberg’s John Authers says “[l]ower real yields make gold, which pays no yield, that much more attractive, so a brief correction in real yields helps to explain a brief correction in gold. That is what the recent drama looks like at this point. At no point did gold drop below even its 50-day moving average, suggesting that its short-term upward momentum remained unchecked, even by a fall of 10%. That correction bottomed shortly after the inflation number came out. The rebound since suggests that the upward trend is thoroughly intact.”
Chart of the Day
Chart note: As you can see, the drop since early March in the Weekly Economic Index is worse than the one during the 2008 financial crisis. As a matter of interest, we added the price of gold. At the moment, the index is in recovery mode though it still appears a bit weak at this juncture, as it did the first time we ran this chart a month ago. Stay tuned. We will repost this chart at from time to time to see if we get a “V”, “W”, “Nike swish” or “lightning bolt” – and gold’s response. Please note that the St. Louis Fed now incorporates a recession bar in 2020 (in grey).