Gold's epic climb toward the $2,000 psychological barrier is receiving assistance from an uncommon source: another safe-haven for assets.
Reuters reports the Swiss franc, a favored hedge of assets during rocky economic times, was subject to monetary easing earlier this month to reduce its strength. This month also has seen gold futures skyrocket in value, pushing past two benchmark prices: $1,800 per troy ounce and $1,900 per troy ounce.
"Gold usually does well in currencies that cut rates and have negative real rates," analyst Tobias Merath of Credit Suisse told Reuters. "If you get a negative nominal yield on government paper and a zero yield on gold, then gold looks more attractive."
Factors that have contributed to gold's rise in value this month are debt crises on both sides of the Atlantic – Europe's struggle with hobbled banks and public finance systems, and the U.S. political struggle with the debt ceiling – and the economic recovery from the Great Recession losing momentum.
Nearly two of three of the 1,004 people in Switzerland polled from August 18 to August 20 endorse additional measures of monetary easing to reduce the franc's strength, according to AFP.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.