GRAPH: Gold price in Euros since January 2001. Courtesy RBC Capital Markets
GRAPH: Gold and the Euro have grown a higher correlation since the millennium. Courtesy RBC Capital Markets
As Europe has climbed on the bandwagon for those with near to no growth, the Euro is no longer seen as a safe haven for investors and there is mounting speculation that the ECB might cut interest rates in order to spur growth.
Gold bugs see the precious metal's robust performance as a sign that the correction from this year's high at 443 to a low at 415 dollars has cleared the way to a new attack on the 2005-high after the bounce-back from the low. Gold held up well today despite the good recent US economic indicators, trading stable at 428 dollars an ounce.
Japanese futures related selling has weighed on the gold price this week as Yen-denominated gold prices hit a 12-year high, precious metals experts of UBS reported via the Australian Investment Review. The team's trading contacts estimate that 1 to 1.5 million ounces of longs have been liquidated over the last week, leaving the net long positions at "certainly less than 1 million ounces." UBS remains "cautiously optimistic" for gold in the near term.
NOTE: Gold Decouples from USD - Part 1 is here.