Gold price has shown a remarkable stability for almost two weeks straight. Investors
and authorities in the precious metals trade are hopeful that this trend continues for the
next couple of weeks so as to establish its price in the market and increase more de-
mands for it.
Most of the time the gold price trend runs inversely to the current dollar price in the mar-
ket. So it can be observed that when there is a decrease in the value of dollar, there is
a signiﬁcant increase in the gold price.
This is because gold is a commodity that is US dollar denominated.So when dollar
value decreases, it means that more dollars are required to buy certain commodities. In
terms of gold commodity, it signiﬁes higher value or bullion price and encourages more
sales and demand in the market.
But upward or downward the trend of the dollar value is not the sole factor that affects
the gold price. Nevertheless, it has a signiﬁcant inﬂuence over the trending gold and
precious metal prices in the market. Another big factor that affects the gold price is the
market demand for it.
Now that the Gold Price has been Stable for Two Weeks is a good sign for investors as
it indicates that the market is being favorable to precious metal investments .
A caption of an article below from The Economic Times tackles the latest trend in gold
price, and current developments in the precious metal market.
Gold Price Stable for Two Weeks
Gold held near two-week highs on Wednesday and was set for its second successive
weekly gain, thanks to a modest decline in the dollar that may sharpen investor appetite
for the metal.
The European Central Bank meets on Thursday to discuss monetary policy and is
widely expected to cut euro zone rates to a record low to try to contain the debt crisis,
without resorting to buying the sovereign bonds of heavily indebted nations such as
Spain and Italy to lower their borrowing costs.
More crucially for the gold market is U.S. monthly employment data on Friday, which will
offer some proof of the ability of the economy to generate jobs and the scope for the
Federal Reserve to take additional policy measures to stimulate growth.
Spot gold was bid at $1,615.99 an ounce at 0953 GMT, down 0.1 percent on the day
and was up nearly 1 percent on the week, set for its second consecutive weekly rally, its
longest stretch of gains since late February.
COMEX gold futures for August delivery traded down 0.4 percent on the day at
$1,616.20 on the Globex electronic platform.
FED TRUMPS ECB The ECB’s widely expected decision on Thursday to cut rates by 25
basis points to a record low 0.75 percent could prove positive for gold, even if shifts in
U.S. rates have more impact on the dollar-price of the metal.
“Gold tends to beneﬁt from easier monetary policy,” HSBC analyst James Steel said.
“….while an ECB rate cut might be initially bearish for the euro it should ultimately help
support the euro to the extent that it relieves ﬁnancial market pressures in the euro
zone. Based on the positive correlation between the euro and gold prices, an ECB rate
cut could therefore be near-term bearish but eventually bullish for gold.”
The correlation between the euro/dollar exchange rate and the gold price touched its
strongest in 2-1/2 months on Wednesday, rising to 0.60 from below 0.40 in late June,
meaning the two assets are more likely to move in tandem with each other than they
were two weeks ago.
In fundamental news for gold, output in China, the world’s largest producer, stood at
31.2 tonnes in May, up from 28.8 tonnes in April and the highest monthly ﬁgure this
The steadier tone in gold extended to silver, to which it tends to be quite strongly posi-
tively correlated. The correlation between the two rose to 0.89, from around 0.85 late
last week, the highest since March.
Silver was last ﬂat on the day at $28.41 an ounce. Platinum slid 0.8 percent on the day
to $1,470.29, while palladium rose by 0.3 percent to $596.25. The palladium price
staged its biggest one-day rally since late December on Tuesday, when it rose by 3.82
The previous session’s weakness in the dollar, which makes it more proﬁtable for
non-U.S. investors to buy dollar-priced assets, together with data that showed car sales
in the United States beat expectations in June helped trigger the rally.
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Previously gold may have been having a hard time in the precious metals market and it
may give an impression to investors that it is not a safe haven investment anymore. But
the current upward and stable trends in that the gold price is an indication that it
doesn’t lose its spark, and that all the reasons why one should invest in gold and other
precious metals such as silver strongly remains