Gold futures climbed to the highest settlement price in five weeks as a slumping dollar boosted the appeal of the precious metal as an alternative asset.
The greenback continues its decline this week after US factory output in December climbed the most in a year, as production of business equipment, automobiles and construction materials rose. In addition, media reports announcing that the International Monetary Fund proposed boosting its resources by as much as $600 billion to safeguard the global economy saw the return of risk appetite, and in turn weakened the US dollar.
Over recent months, the perceived ‘safe-haven’ status of precious metals appears to have faded, with their current rise easily attributed to dollar weakness rather than the usual search for wealth protection. Personally, I remain sceptical as to how long this current rally will last. There might well be a bout of profit-taking before the safe-haven status of the shiny metal reappears.
You might also be interested in: