Gold Price Rises: Inflation Fears, US Dollar Index Testing 3-Year Lows

It’s a tale as old as time, which is more or less when gold’s reliable role as store of value and safe port in any investment storm began. When the US dollar gets weaker, when the confidence of the world in the nothing-backed greenback gets shakier (as it inevitably, progressively will over time), gold shines.

Gold prices have edged up on the back of a tumbling US dollar which, according to analysts, has set the stage for a new bull market for the precious metal. Experts project higher gold prices in the near-term.

The yellow metal was trading at $1,354.65 an ounce as of 10:20 GMT on Thursday, after enjoying its best trading day on Wednesday since June 24, 2016.

Meanwhile, the USD was showing significant weakness, testing 3-year lows:

The dollar index, a measure of the greenback against a basket of six major currencies, fell 0.5 percent to 88.66.

"Higher US inflation combined with the US dollar exhibiting zero correlation to higher interest rates amidst burdening duel deficits (trade and budget) should play out favorably for gold markets,” the head of trading APAC at foreign exchange OANDA, Stephen Innes, told Reuters.

“I think we could see significant US dollar weakness through the first half of the year,” Bill Baruch, president of Blue Line Futures, told the Street. “The real move in gold is yet to come. I think we could see prices above $1,400 an ounce later this year.” 

ORIGINAL SOURCE: Plunging US dollar boosts gold’s safe-haven demand at RT on 2/15/18