Traders got pretty excited about gold prices hitting new all-time highs Tuesday in terms of U.S. dollars and deservedly so. But take away the U.S. dollar pricing and you’ll find that gold is more than 30 percent below its highs in Australian dollars, 15 percent below its highs in Japanese yen terms and even 6% below its highs in the British pound, another of the weaker currencies, according to Ashraf Laidi, chief market strategist for CMC Markets in London.
Based on the prognosis for the U.S. dollar, gold could have a ways to run. Arab oil producers and Chinese officials continue to talk about going away from the dollar for oil pricing and for their reserve holdings, and it seems almost inevitable that the U.S. dollar’s stature as the world’s currency will diminish further – if only there were another choice among the world’s fiat paper currencies to which markets could turn. China is the key with its yuan but seems reluctant to act.
Meanwhile, the U.S. dollar sits precariously above its September low at 76.045. Where is that dollar rally some have been predicting? Where is that return to bearish conditions for stocks? It isn’t just gold or silver but other commodities and stocks appear poised to move higher on the dollar’s weakness. Maybe the markets are just playing another trick on us.
