Wednesday, October 7, 2009
Gold price returns to fresh high
This article talks about an increase in gold prices and it may conitnue to rise if the dollar continued to weaken. The fall in the value of the dollar had a negative impact on the price of gold, which rose to a record high of $1,036.60 an ounce.Gold price rose because a weaker dollar in which gold is valued increases its attractiveness to investors. If the dollar continued to weaken it will lead to a lot of problems regarding the U.S. for people wont invest in the U.S. economy and imports will also fall...
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3 comments:
This article is very interesting, especially the fact that the strength (or in this case weakness) of the dollar has such a direct correlation to the price of gold. It will be interesting to see which directions the prices head depending on if the dollar recovers. A further aspect that caught my eye was the fact that gold prices go up beginning in October due to the demand of primarily one country alone.
Interesting article but it does not come to me as a shock. Dollar and gold are the two mediums that everything else is compared against. There is a direct inverse relation between the value of gold and dollar. As the value of dollar continues to fall with decreasing or really low interest rates, the value of gold rises proportionately.
As long as the interest rates do not go up in the United States, the value of gold is going to rise around the world. Once the interest rates go up, investors would return to investing in dollars and hence increase its value. This increase in the dollar's value will offset the increase in the value of gold and hopefully smoothen it out over the long term
Although a falling value on the dollar has negative aspects, it should also be remembered that it has a positive side. Our budget deficit is huge, and decreasing imports and increasing exports (because they are more competitive with a weaker dollar) is a very positive outcome. Something else to consider.
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