Without the Fear of Inflation or Financial Crisis Gold has Declined in Value

Continued strong economic data from the US and the US interest rate rise suggests that the prospects for the US$ are very good. The backdrop of a strong US$ has historically been a challenging one for gold. Without the fear of inflation or a financial crisis, gold has declined in value. Asian retail demand and central bank purchases along with the return of post QE inflation are potential sources of support for gold prices.

The Forex Gold Index stands at US$1053 per oz. having progressively fallen from a January high of US$1300 per oz. Gold is currently trading at a six year low after increased speculation that the US Federal Reserve will raise interest rates. This speculation has triggered a recent selloff in the precious metal.

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