Jakarta, CNBC Indonesia – World gold prices moved up in trading this morning. The fading of the prestige of the United States (US) dollar is the cause of the might of gold.
On Monday (4/10/2021) at 06:01 WIB, the world gold price on the spot market was recorded at US$ 1,763.93/troy ounce. Up 0.2% compared to last weekend’s position.
The strength of the faded United States (US) dollar exchange rate became ‘doping’ for the precious metal. At 06:18 WIB, Dollar Index (which measures the position greenback against six major world currencies) fell 0.08%.
This correction occurred after the US dollar experienced a fairly long rally. Since the end of 2020 (year-to-date), Dollar Index up 4.47%. So the currency of Uncle Sam’s country is vulnerable to profit taking.
The price of gold and the US dollar has an inverse relationship. When the US dollar is sluggish, the price of gold will accelerate.
This is because gold is an asset that is priced in US dollars. When the US dollar weakens, gold becomes cheaper for investors holding other currencies. The demand for gold rises, the price rises.
In addition, market concerns over the risk of inflationary pressures made gold ‘sexy’. Gold is an asset to hedge (hedging) to inflation.
“If anyone tries to say that inflation risk is still far away, then it is a fool,” said Ole Hansen, analyst at Saxo Bank, as reported by Reuters.
The increase in energy commodity prices, continued Hansen, is a clear example of inflationary pressure. Nah, gold is an anti-inflation asset so it is likely to be excellent in the market.
“The surge in energy commodity prices, especially in Europe and China, will boost inflation and create shocks. This will sustain the gold price,” added Hansen.
CNBC INDONESIA RESEARCH TEAM
(aji / aji)
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