A weaker US dollar has been continually cited as being inevitable – and good for gold prices – and now seems to be coming to fruition. The greenback has tumbled this week in tandem with the decline in 10-year yields and political tensions. Yesterday (Thursday) it sunk to its lowest point for more than four-weeks against other currencies.
In addition to falling bond yields, the dollar has also been hit by suggestions that interest rates will remain artificially fixed by the Federal Reserve for some time to come.
Credit Agricole’s head of G10 FX Research, Valentin Marinov said this doveish stance is weighing on the dollar, noting “The UST yields, while elevated historically, have been caught in a tight range in recent weeks and thus offered little support to the USD. This is due to the still very dovish tone of the Fed that seemed to ignore the rapidly improving outlook for the US economy.”
The new US-imposed sanctions on Russia also stunt gold’s strength while further aiding the gold bulls. Buy now to benefit.