But gold quickly reversed direction after Draghi said that sovereign bond purchases would be limited and that he was surprised that the market thought the ECB would act more aggressively if certain fiscal union conditions were met by the Eurozone. The euro tanked on the news, which dragged on gold. A rate cut in and of itself is confusing to gold. Typically low rates are good for the hard asset as the cut devalues the currency, but the euro and gold have been moving together of late in opposition to the U.S. dollar. If the rate cut is seen as helping the Eurozone, gold could rise with the euro, but if it is seen as devaluing the currency, both assets could head lower. This tug-of-war could keep gold trapped in its trading range.
2012 Stock Predictions and Outlook
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