April 30, 2008 at 3:00 pm by Tom Lydon
The U.S. dollar is toughening up, much to the dismay of gold which hit a three-month low on Tuesday, weakening the focused stocks and exchange traded funds (ETFs).
Also on the decline were oil prices along with weak sentiment just ahead of the Federal Reserve’s big meeting today. U.S. gold futures for June delivery on the COMEX division of the New York mercantile exchange settled at $876.80 an ounce, as of Tuesday. As the dollar gains strength, it makes gold more expensive for holders of other currencies, thus lowering demand.
Meanwhile, the dollar hit its highest level against the euro in four weeks. It’s on track for its largest monthly gain in a year after expectations that the Fed will end its easing campaign, reports Reuters.
Returning strength in the dollar would be the major reason streetTracks Gold Shares (GLD) is experiencing money outflow. But one trader said gold’s fundamentals are still firm, despite the sell-off.
The performance of the dollar vs. the euro in the last year:
Tags | Federal Reserve, GLD, Material ETFs, Metals, Oil
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