| Why Positive Outlook on the US Dollar Is Negative for Gold | |
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Is This the Right Time to Buy Gold? (Continued from Prior Part) US dollar
Tracked by the Federal Reserve, the weekly US Dollar Index (UUP) measures the value of the dollar compared to its six significant trading partners—the euro, Japanese yen, British pound, Canadian dollar, Swiss franc, and Swedish krona. A rising value means that the dollar is stronger compared to other currencies and vice versa.
The expectations of a Fed rate hike this year are keeping the US dollar buoyant. In the latest move, China devalued the yuan on August 11 and then again on August 12. This pushed the US dollar even higher. China described the devaluation as a “one-off depreciation.” This pushed the yuan to the lowest level against the US dollar in almost three years.
Positive outlook
The Fed will likely take a more gradual approach at rising interest rates. However, its stated policy of rate hikes either this year or next year is in contrast to loosening monetary policy elsewhere, especially in Europe and Japan. In contrast, commodity price weakness is impacting commodity-producing countries’ currencies, including Australia and Canada. China’s recent moves will put more pressure on commodity producer countries’ currencies. This is expected to add to the strength of the US dollar.
US dollar and gold
Dollar-denominated assets, including gold, are influenced by the dollar’s strength. A strong US dollar is negative for gold and vice versa. The current strength in the US dollar is also putting pressure on gold prices.
As a result, it’s important to track the direction of the dollar. This can point you towards the direction of gold prices (GLD) and gold stock prices like AngloGold Ashanti (AU), Gold Fields (GFI), and Agnico Eagle Mines (AEM). The US dollar also influences funds like the Market Vectors Gold Miners ETF (GDX). Together, these three companies contribute 11.90% towards GDX’s holdings.
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VanEck Vectors Global Alternative Energy ETF
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PRODUCER |
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CODE : GFI |
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ISIN : US38059T1060 |
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ProfileMarket
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Asset profileContact Cpy |
Gold Fields is a gold producing company based in South africa. Gold Fields produces gold, copper in Australia, in Ghana, in Peru and in South Africa, develops gold in Mali, and holds various exploration projects in Peru. Its main assets in production are ST IVES MINE and AGNEW in Australia, BEATRIX MINE, DRIEFONTEIN, KLOOF MINE, SOUTH DEEP, KLOOF and BEATRIX in South Africa, DAMANG, TARKWA and DAMANG PROJECT in Ghana and CERRO CORONA in Peru, its main asset in development is KOMANA in Mali and its main exploration properties are LOBO in Philippines and CHUCAPACA and CANAHUIRE in Peru. Gold Fields is listed in France, in South Africa and in United States of America. Its market capitalisation is 739.1 millions as of today (€ 675.4 millions). Its stock quote reached its lowest recent point on November 10, 2000 at 1.69, and its highest recent level on October 10, 2024 at 15.58. Gold Fields has 47 442 200 shares outstanding. |