Gold prices have been falling. Some of this price decline could be associated with higher margins, but there is a divergence between stocks and gold as noted by the graph. If gold is viewed as a safe haven and it is falling then the market thinks that risk-on trades should take place. This means that stocks should be increasing. There has been slight upward movement in equities so gold may be an indicator of good things for risky markets. CHF has declined so the demand for a Swiss safe haven has also declined.
However, if there is the belief that QE3 and inflation is around the corner, gold should still be going higher. Does this mean that the gold market is not predicting any Fed action?
Gold is bipolar. Sometimes it is viewed as a place for inflation protection and at other times it is viewed as a safe haven for risk. These two actions can be at odds.
However, if there is the belief that QE3 and inflation is around the corner, gold should still be going higher. Does this mean that the gold market is not predicting any Fed action?
Gold is bipolar. Sometimes it is viewed as a place for inflation protection and at other times it is viewed as a safe haven for risk. These two actions can be at odds.
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