Gold continues down, Commerzbank says dollar-euro currency war has already begun
Gold continues down, Commerzbank says dollar-euro currency war has already begun by Michael J Kosares for USA Gold
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Gold took an abrupt turn to the south early yesterday following remarks from European Central Bank President Christine Lagarde widely viewed as talking down the euro. Her remarks, in turn, were inspired by an unexpected early surge of virus infections in Europe. By day’s end, the precious metal finished down $38 at $1914 falling briefly at one point below the $1900 mark. This morning, the precious metal is down another $3 at $1912. Silver is down 42¢ at $24.39.
Germany’s Commerzbank believes a currency war has erupted between the dollar and the euro, according to an analysis reviewed by Kitco yesterday. “Gold should emerge victorious in this environment,” says the bank, “because it cannot be reproduced at the push of a button as the USD, EUR or other fiat currencies can. After all, given the corona pandemic’s negative impact on the economy and inflation, hardly any central bank wants to see an overly strong currency at present.” As a result, says the bank, investors should look beyond the near term noise and focus on gold’s longer-term trend.
On this side of the big pond, Fed Chairman Powell answered Lagarde with a volley of his own yesterday afternoon saying “[w]e remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.” Commerzbank believes Powell will lean heavily on Congress during testimony later today to do its part in stimulating the economy. Whether or not Congress can muster an effective fiscal rescue in an election year remains to be seen.