PHYSICAL DEMAND SUPPORTS GOLD PRICE; NEXT CRISIS CAUSED BY THE DOLLAR
The Gold price is relatively flat this morning, while the Silver price is enjoying a modest gain. To go along with physical demand of the metal, “Gold has been following the euro/dollar movements, which are playing a big part on an intraday basis,” according to Standard Bank’s Walter de Wet. He continued, “On a more fundamental side, a fairly good physical demand, which is providing some support, is not coupled by substantial speculative interest after signs that the real economy is strengthening.”
CNBC broke down the possibility of the next financial crisis and what could lead to it. Perhaps surprisingly, it could be the strength of the U.S. dollar. If the current easy monetary policy expires in the second half of the year, some analysts are predicting a bull market for the U.S. dollar that could last for five years. However, “the dollar bull market tends to trigger crises in emerging economies” according to Andy Xie, former economist for Morgan Stanley. “This time is likely to be the same. During the last ten year's dollar bear market, massive amount of hot money flowed into emerging economies, causing currency appreciation, asset bubbles. (But) when the dollar turns the direction, so does the liquidity. The virtuous cycle on the way up becomes a vicious one on the way down.”
At 9 a.m. (EST), the APMEX Precious Metals spot prices were:
- Gold, $1,683.40, Up $6.50.
- Silver, $32.05, Up $0.29.
- Platinum, $1,704.00, Up $5.90.
- Palladium, $756.80, Down $2.00.
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