Gold glitters over $1000
The price of gold has risen above $1000 for the first time and the falling US dollar is the main cause. As the greenback slides in the foreign exchange markets, so gold becomes an even more attractive target for speculators who are keen to hedge against the growing global economic uncertainty and also take advantage of stronger currencies to buy gold - which of course is priced in dollars. Nervous investors are looking for assets that will give a more certain return and, with equities markets struggling to recover from the fall-out from the credit crunch, foreign investors now regard precious metals as hard assets that can protect the real value of their portfolios. How much longer can the gold bull (or should that be bullion) run continue? The spread-betting markets are chocker with traders taking bets that gold will rise to $1100 or higher still. The lesson seems to be this - watch what the US dollar is doing first and that will give you the next move in the price of gold. So when will the US Fed stop cutting interest rates?
