Gold Rises as the Financial Backdrop Mellows

By John Stepek – Bloomberg

A number of things strike me as interesting about gold’s current advance. As I’ve mentioned before, it’s not generating much fanfare, partly because lots of other stuff is hitting record highs too (have I mentioned the FTSE 100 lately?).

Another is that it has largely happened against a backdrop of higher interest rates and a strong US dollar. Neither of those things are traditionally viewed as good for gold. Gold is priced in US dollars (so all else being equal, a rising US dollar should mean a falling gold price); and gold pays no interest, so in a rising rate environment, that’s a drawback.