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June 29, 2009 - The gold spot price has fallen today for the first day in five as the United States Dollar has paused its decline, thus reducing short-term safe haven demand. The gold spot price has contracted 4.3% this month while the Dollar Index has risen 1.1%. The current inverse correlation between gold and the dollar is very strong, especially since there is a significant amount of optimism and pessimism with both investing markets. One of the main reasons why the dollar is strengthening at the moment is because China has mentioned that they will not alter their foreign currency reserves, yet they may continue purchasing gold as a hedge in the event that the fiat currency collapses. Many investors should look at China as an excellent example of a sound diversification method, because they own both dollar-backed assets and precious metals. The latest short-term market projections are forecasting that the gold spot price may begin a rebound if the United States Dollar contracts as a result of further inflationary speculation after the Federal Reserve mentioned that they would continue their overprinting and quantitative easing measures until they feel that it is time to increase interest rates.

By around 4 PM Eastern Standard Time, the gold spot price has fallen to $937.20 per ounce, down $1.80 or .19% for the trading day, yet still up $10.40 or 1.12% in the last 365 trading days. Bloomberg.com’s short-term gold forecast has reported that 57% of traders, investors and analysts surveyed believe that the metal could continue increasing this week as a result of higher safe haven demand.

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Arthur McGuire

Senior Staff Writer - Gold-Investment.info