Gold bullion and related exchange traded funds are under pressure as a stronger U.S. dollar makes purchases more expensive and demand dips overseas.
The SPDR Gold Shares (NYSEArca: GLD) has declined 1.8% over the past month but is still up 5.2% year-to-date.
COMEX gold futures are currently trading around $1,266.8 per ounce.
Bullion prices have been dipping as the U.S. dollar index rises to a near 14-month high, with the euro currency crossing below the psychological $1.3 level Thursday. Gold becomes more expensive for foreign investors as the USD strengthens.
“Since gold is a dollar-denominated commodity, as the dollar goes up, gold gets more expensive for non-U.S. dollar purchasers,” Erin Gibbs, equity chief investment officer at S&P Capital IQ Global Markets Intelligence, said on Yahoo! Finance.
Gibbs argues that the U.S. dollar will continue to appreciate, especially after the European Central Bank announced additional rate cuts and contemplates quantitative easing.
The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) has increased 1.7% over the past month and is up 2.6% year-to-date. [King Dollar’s Royal Ascent Lifts These ETFs]