Trader Talk

Gold Price Drivers: Japan Politics, Swiss Banks


Gold and gold stocks rally; several factors cause dollar to decline.

With gold prices at a new high and many gold stocks also near new highs, you might think there is a sudden surge in demand for the precious metal. But much of the surge is likely currency-related:

1) there have been rumors that the Swiss National Bank will raise rates Thursday (negative for dollar)

2) there have been rumors that the Fed may indeed embark on a program to buy mortgage backed securities (quantitative easing generally negative for dollar);

3) Japanese Prime Minister Nato Kan won re-election; Mr. Kan was opponent of intervention to weaken the yen, so the news is positive for the yen, negative for the dollar.


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