Weak Dollar Drives Gold Prices Higher
NEW YORK (KITCO) - Gold is traded moderately higher on Friday, with the most active futures contract currently trading up $3.70 at $1323 per ounce. Friday’s gains have taken gold to its highest value so far in 2018. Gold prices reached the former 2018 apex when it closed at $1322 per ounce.
Although gold prices surged to an intraday high of $1327 on Thursday of last week, on a closing basis gains are not only a new record high close for the year but also a four-month high for the precious yellow metal.
This rally, which began in mid-December with gold trading at $1238, has been driven by multiple factors, but it has been the tailwinds provided by a weakening U.S. dollar that has had the most enormous impact. Since gold is paired for price in U.S. dollars, there is an exact inverse relationship between gold and the U.S. dollar. Therefore, a weak or strong U.S. dollar will always move gold prices with an exact negative correlation.
Although gold prices surged to an intraday high of $1327 on Thursday of last week, on a closing basis gains are not only a new record high close for the year but also a four-month high for the precious yellow metal.
This rally, which began in mid-December with gold trading at $1238, has been driven by multiple factors, but it has been the tailwinds provided by a weakening U.S. dollar that has had the most enormous impact. Since gold is paired for price in U.S. dollars, there is an exact inverse relationship between gold and the U.S. dollar. Therefore, a weak or strong U.S. dollar will always move gold prices with an exact negative correlation.