Wednesday, June 13, 2007

Gold Market #6 – Gold and the Dollar

From Bloomberg:

Gold in New York fell to the lowest price in more than two months on speculation that higher interest rates will boost the dollar and reduce demand for the precious metal as an alternative investment. Silver also declined.

Gold generally moves in the opposite direction of the U.S. dollar, which rose for a sixth straight day against the euro as a rout in U.S. Treasuries pushed 10-year yields to the highest rate in more than five years. Holding gold becomes less attractive as interest rates rise because the metal has no fixed returns.

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