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Strategies & Market Trends : China Warehouse- More Than Crockery

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To: RealMuLan who wrote (2074)	12/17/2003 7:27:39 PM
From: RealMuLan	Read Replies (1) of 6370

Gold price is a flashback to the '80s - and good times may well roll on December 15, 2003 Print this article Email to a friend Gold has had a banner year. The stuff that glitters jumped by $US4.70 an ounce overseas on Friday to $US410.10 and has now risen by $US87.35, or 27 per cent, since April 8 when it hit $US322.75. Gold was $US351.60 at the start of the year, almost 17 per cent below its current level, and is trading at prices last seen at the end of the '80s. The technical pivot of the rally has been the decline of the US dollar, which produces a virtually automatic increase in the $US gold price. The greenback hit record lows against the euro on Friday and is now about 30 per cent below its peak in the first quarter of 2002. The $US gold price has risen by the same amount over the same time. But there are reasons to believe that this is not a fool's gold rally. The US dollar is not expected to recover strongly any time soon, for one thing. The US domestic and trade deficits are running at a combined $US1.5 billion a day and America's cash interest rate of 1 per cent is half that of Europe's, 2.75 percentage points below Britain's, and 4.25 percentage points below Australia's, and is unlikely to change in the near future. The US Federal Reserve is not signalling an imminent rise and the market believes the Bush Administration is happy to have a weaker currency buttressing its attempt to stimulate the economy. theage.com.au

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