Dollar Is Down, Gold Is Up
Yesterday was the end of some short-lived rallies as stocks fell back from their record highs and the dollar index retreated back to pre-Brexit lows. In the long term, these changes are showing the dollar continues to lose its purchasing power due to central banking’s bad fiscal policy. As the dollar declines, gold prices are likely to respond with upward movements throughout the remainder of the year.
The Bloomberg Dollar Spot Index halted a drop of up to 1.2% after William Dudley, Federal Reserve Bank of New York president and chief executive officer, said policymakers could potentially raise interest rates as soon as next month. According to Bloomberg:
The dollar has lost ground over the past month as lackluster data in the world’s biggest economies fueled speculation the Fed would be slow to raise borrowing costs.”
Core CPI Numbers
Bullish Gold and Emerging Markets
While US stocks and the US dollar fell, gold rallied for a second day and emerging market currencies hit their strongest level in more than a year. Stocks from those nations gained for the ninth day in a row.
Gold rallied because investors are looking for a safe haven to combat the continued monetary easing that is likely to come in the form of another rate cut or more QE before the end of the year.
Reprinted from SchiffGold.com.
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