Thursday, February 12, 2009

Gold and US $ moving in tandem - is this an anomaly?

Gold and US Dollar move in opposite directions. So, why are they gaining in strength in tandem?

US $ is gaining strength against the world currencies. Currencies in the other nations are becoming weaker due to reduced exports and due to less foreign currency remittance. Than is pushing US $ higher relatively while US $ should be falling due to deficit caused and will be caused by stimulus package.

Developing and few developed countries currencies are falling. Investors are flocking to gold as a safe heaven investment. Due to this the demand; hence, the price of gold is rising.

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