Dollar determines gold price

By last Friday, the gold price was moving ever closer to the psychological price barrier of $750 an ounce.

Earlier in the week the dollar was moving upwards against the Euro and other currencies but the rise was sort-lived and it had returned to a downward trend by Thursday and Friday.

This can be taken as an indicator that the increasing gold price is a sign of the difficulties of the dollar and at this point it can be argued that gold is indeed currency, despite the reluctance of the world’s Central Bankers to take this view.

Countries that have sold off their reserves for dollars in the past could find that the cost has been dear in terms of foreign exchange holdings.

The UK, for example, substantially reduced its gold holdings when the price was at its lowest point for many years.

During last week, the Denver Gold Group’s Gold Forum met to give gold miners the opportunity to promote their companies. Few delegates were predicting a fall in the price of gold in the foreseeable future.

Some analysts were taking the view that small rises or falls in gold production could prove to be irrelevant in the metal price performance, as the key driver is the strength or weakness of the US dollar.