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Obama Under Fire Over Falling Dollar As Gold Nears $1050
Obama under fire over falling dollar
Edward Luce and Krishna Guha
Financial Times
Wednesday, October 7, 2009
The sharp fall in the US dollar is giving ammunition to the critics of the Obama administration and fuelling broader concerns about the erosion of America’s reserve currency status.
Republican politicians have highlighted the dollar’s slide as evidence of waning US power. On Wednesday, Sarah Palin, the Republican former vice-presidential candidate, added her voice to those who have expressed concern over the consequences of rising US indebtedness and dependence on foreign oil.
“We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar,” she wrote on her Facebook site.
Most economists attribute the recent surge in the gold price to the actions of a few speculative investors hedging against inflation fears in the US. And they point out that the far deeper US bond markets show no sign of concern over inflation. Indeed, analysts say that the dollar’s slide stems more from investors’ growing appetite for risk and the prospects of interest rate rises elsewhere.
- A d v e r t i s e m e n t
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Investors cling to gold as prices surge
Javier Blas
Financial Times
Wednesday, October 7, 2009
Gold prices continued to surge on Wednesday, hitting a fresh record close to $1,050 a troy ounce as investors bet that trading momentum would push the precious metal still higher.
Barclays Capital said gold prices, which have risen 10.3 per cent since the end of August, could run to as high as $1,500 an ounce if previous technical trading patterns were extrapolated.
“We believe gold has a significant upside potential into 2010,” the bank said, adding current prices “were off the charts”. In spite of a 40 per cent rally in gold prices since Lehman Brothers collapsed a year ago, few traders appeared to be taking profits or betting on a price fall.
“The selling is not materialising,” said James Steel, a precious metal analyst at HSBC in New York, echoing a view held by other analysts and traders.
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