Tuesday, 6 Oct 2009

Gold Hits Record Highs as Dollar Tumbles

Gold rose to record highs on Tuesday, reaching as high as $1,045 an ounce in New York, topping the previous record of $1,033.90 in March 2008. The rally followed the unexpected interest rate increase by the Bank of Australia which spurred optimism in the global economy and broad-based stock gains, causing the Dollar to fall. The rise in commodities' prices was also helped by inflationary fears as central banks continue to print money. Commodities are used as a hedge against inflation as well as a weakening Dollar.

The dollar declined against every major denomination except the British Pound. Weighing on the greenback was a report that stated Gulf-area oil producers, in concert with China, Russia, Japan and France, are planning to end the practice of pricing Oil in Dollars. While denied by several officials, the report still had a negative affect on the Dollar.

USD/JPY May Continue its Bearish Momentum

Traders may notice the 4-hour USD/JPY chart. The chart shows bearish movement from the following: 1. The trend line has confirmed its third point and the trend is intact. This downward trend has the potential to remain in motion as it does not display any signal that the trend is changing. If the upward movement continues towards the trend line without a significant breach, the line may be used for another entry point. 2. The Relative Strength Index has curved down. This shows the potential for a continuation of the downward movement.