U.S. Dollar Trips, Gold ETFs Make Gains
September 29th 2010 at 12:00pm by Tom Lydon
More trouble could be in store for the ailing U.S. dollar exchange traded fund (ETF). Investors are increasingly believing that the Fed will step in with quantitative easing measures to support the economy, pressuring the greenback down.
The dollar gave up minor ground to the euro and the yen on the assumption that the Federal Reserve stimulus remains more a question of when than if. [Gold, Treasuries, the Dollar; Connecting the Dots.]
Andrew Johnson for The Wall Street Journal reports that the dollar hit its weakest point since January and it’s at lows last seen in March 2008 against the Swiss franc. [Safe-Haven Seekers Boost Swiss Franc ETF.]
- PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP)
- PowerShares DB U.S. Dollar Index Bearish Fund (NYSEArca: UDN)
In turn, the dollar’s weakness has been pushing gold even higher. Matt Whitaker for The Wall Street Journal reports that on Wednesday, gold pulled back from record highs but remained above $1,300 on dollar weakness and safe-haven seeking. [Is It Time To Short Gold With ETFs?]
The weaker dollar continues to support the precious metal, and concerns over other currencies also have the support of gold over paper. Ultralow interest rates on other assets have supported the market for gold by lowering the costs of holding the metal, which pays no interest itself. [Tom Lydon Talks Gold ETFs With Chuck Jaffe.]
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.