Gold rose and the US Dollar fell ahead of the US consumer data report coming out Wednesday. Some market watchers believe the rise in gold prices is due to short covering ahead of the news.
Others think it’s a straightforward example of the dollar dropping due to inflation (or expected inflation), so gold rose because of a fundamental relationship with the dollar. And still others think it’s just another step in the so-called race to the bottom, wherein the country whose currency is weakest gains advantages in international trading, and paying off their deficit. Whatever the reason, gold easily stayed above the 1300 psychological level, and is back around 1325 this morning.
We expect quiet trading until the US consumer data report comes out tomorrow, then we might get a better idea of which direction gold is heading next. We’d have to pick this article from the Hindustan Times as the article of the day, as it covers more ground.