Dollar Strengthens as Gold Futures and Crude Oil Decline
Posted by Edward Dy on April 29th, 2008
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Photo Credit: Manuel Delgado Tenorio
As the price of crude oil dives under $116 on concerns of dwindling demand, the gold futures fall sharply amidst a stronger dollar
The drop in crude oil prices and a rebounding dollar have sent the gold futures plummeting Tuesday to a four-month low.
Traditionally, gold is viewed by investors as a hedge against high oil prices and inflationary trends; however, things are looking bright for the dollar again with the drop in crude oil together with other commodities such as silver, copper, heating oil and agriculture futures
The reason for the dollar’s surge against other major currencies is due to increased confidence the Federal Reserve end cutting of interest-rate, turning its attention to controlling inflation, to cut benchmark rate Wednesday by a quarter of a point, and then maintain it throughout the year.
Lower interest rates can boost the economy; however, this has the tendency of undermining the dollar, and may encourage investors to go for gold and other hard assets that are know for holding their value.
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