COMPANY COMMENT: Why the sliding dollar holds the key to gold’s recovery
A softer dollar and a lower gold price are rarely bedmates
Fearmongers would have the world on the brink of nuclear conflict, yet the gold price is falling. Whatever the reasons, investors must feel let down by gold’s lack of traction as US President Donald Trump and North Korean dictator Kim Jong-un are talking tough. If this scenario does not create fertile ground for gold as a safe haven, you would be hard-pressed to say what does.Gold did spike to a six-month high before the first round of the French presidential election. But the victory of centrist Emmanuel Macron led to a sharp retreat, with spot gold losing 1.14% in April. It still is up 8% for the year (in dollar terms). More remarkable is that gold fell in a weaker dollar environment. Overall softer commodity prices, notably iron ore, also played a role. A softer dollar and a lower gold price are rarely bedmates. The recovery in the rand from just less than R14/$, after SA’s credit downgrades, to R12.88/$ took the shine off local gold stocks. However, the rand remains vulnerable, ...
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