hr: Currency

Photo Credit: kevindooley

Triggered by rising oil prices, fear of inflation has gotten investors running after gold. However, the gold price surge was short-lived after a US dollar rebound.

Said increase in gold was a reaction to a new surge in oil price — just a little bit under $120 — earlier due to rumors that oil supply coming from Nigeria as well as the North Sea might be threatened.

Photo Credit: covilha
Instances or even rumors of threat to oil supply will get investors scampering after gold. This they do in order to neutralize rising inflation.

As an alternative to the US dollar, gold investment has suddenly lost its appeal due to the recent rebound of the US currency.

As the world awaits the decision of the Federal Open Markets Committee on Wednesday analysts expect the US dollar to stabilize further. Last week the dollar has pulled close to four cents back to $1.60 against the euro.

Gold traded higher earlier against the dollar as an exaggerated response to further oil price hike in an attempt to curb inflationary trends. However, as the dollar gained a favorable momentum against gold, investors have more than welcomed the price shift.

As US stock markets begin to stabilize, investors are likely to put their investments back into equities instead of gold.

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