Despite a weaker United States currency report yesterday, gold prices really did not change. On Monday, the dollar fell against other major world currencies. As we have discussed before, gold is considered safe which makes it a hot commodity during a recession. Even though the dollar is still falling in value, gold has stayed unchanged. That is absolutely normal. Gold is beginning to lose its valor now that the economy is beginning to strengthen.
Be prepared for a rapidly falling gold price very soon as investors keep regaining confidence in the economy. The dollar will begin to increase its status and investors will likely feel less of a need to use gold to battle inflation, which ironically can be sparked by a falling dollar.
A weak US dollar has also been known to bring down oil prices. Oil is priced in US dollars, as are a lot of things, so as the dollar falls oil becomes less expensive for foreign buyers, conversely reducing the income from the oil we export.
Investor confidence concerning the stock market has been looking more promising since early March as data suggests the recession is ending and as the government floods the financial system with cash. As investors become more confident and expect the inevitable recovery, they will drive retail prices higher on the belief that demand will soon rebound.
On the New York Mercantile Exchange, expected August gold prices fell 30 cents to $980 an ounce. July silver rose 12.5 cents to $15.7350 an ounce and July copper futures jumped 12.15 cents to $2.3190 a pound.
Yesterday’s Wall Street reports showed the Dow up about 230 points and other indexes rose at least 2.7 percent. Hopes constantly change right now concerning the idea that the recession will soon end but the rising stock market renewed hopes once again.