Gold, Euro Continue Gains on Weak U.S. Dollar

By: LiveCharts

Despite some positive earnings reports, investors remain concerned about recovery prospects in the US. Analysts are also mixed about the long-term effects of the Fed buying Treasuries to help spark the economy.

Gold has not looked back since clearing $1,300 and has a Wednesday (October 13) morning spot rate of $1,358. Gold remains the investment of choice for safe money speculators who seem to have bought into the prospects of gold moving toward $2,000 in the near future.

This target has been identified recently by some gold market analysts who have suggested by the end of 2011 or 2012, gold prices may reach that level.

Perhaps more impressive has been the euro’s climb from an early June 2010 low of $1.1876 to a current spot rate of $1.3963.

The euro cleared $1.40 and topped out at $1.4003 early Wednesday morning. This is the first break of $1.40 since February 2010.

The euro has produced volatile medium-term swings in the last year that have provided strong gains for currency speculators that have bought at the extremes and held on to profits.

One euro was worth more than $1.50 in early December 2009. It fell over 30 pips to the 2010 low in June, and has subsequently returned more than 20 pips to its current price point.

Reasons behind the strong moves for the euro-dollar include the up-and-down economic expectations in both regions. Several leading European Union members, including Spain, Greece and Portugal, faced dire debt situations during the summer months, which led to the June low for the euro.

However, Union members (most notably Germany) rallied with support and assistance to protect their common interests. This renewed focus on the struggles in the US housing and labor sectors, and the bounce higher for the euro-dollar.

The long-term prospects for the dollar are unlikely to change until the Central Bank feels compelled to explore rate increases. Based on recent commentary and events, that point is at least months away.

Neil Kokemuller

LiveCharts.co.uk

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University. He is also in house stock market commentator at Live Charts UK, where you can find real time charts and share prices .

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