Dollar pushes gold around
May 17, 2018
On May 15, the price of gold hit its lowest COMEX close since Dec. 27, 2017. As measured in U.S. dollars, the price of gold that day was down 1.3 percent year to date. I repeat, as measured in U.S. dollars. At a close of $1,289, that was the first time in 2018 that gold closed below $1,300 in U.S. markets.
Yes, the U.S. dollar is the most important currency used in international commerce. The U.S. Dollar Index on May 15 was up about 1.3 percent year to date, almost exactly the same as the dollar’s performance against gold.
However, the U.S. dollar isn’t the only significant monetary unit. If you compare the price of gold against other currencies on May 15 for the 2018 year to date results, one may draw other conclusions on the 2018 performance of gold:
- Australia dollar – gold up 3.1%
- Canada dollar – gold up 1.0%
- China yuan – gold down 3.2%
- Euro – gold up 0.04%
- Great Britain pound – gold down 1.3%
- India rupee – gold up 5.3%
- Japan yen – gold down 3.4%
- Russia ruble – gold up 6.6%
- Switzerland franc – gold up 1.5%
The point of this comparison is to look for the strength or weakness in the price of gold beyond just the U.S. dollar. Further, if you consider that the U.S. Dollar Index from April 10, 2018, to May 15, 2018, was up 4.3 percent, you realize how much stronger the value of gold looked against every one of these currencies, including the U.S. dollar, just five weeks ago.