Email of the day on the Dollar and commodities
Comment of the Day

May 10 2022

Commentary by Eoin Treacy

Email of the day on the Dollar and commodities

A very well-respected cotton trader in Texas told me many years ago, that amongst all the factors influencing the price of cotton, the value of the dollar is by far number one. I guess this also is true for the price of gold to some extent. I was presently surprised to see how well gold has held inspite of the dollar’s strength. Am I missing something? I would be grateful if you would share your views on gold in the current environment. As always thanks for your very valuable service. 

Eoin Treacy's view

Thank you for your kind words and this topical question which may be of interest to the Collective. The Dollar usually trends higher when there is a wide interest rate differential with other currencies supporting it. That makes borrowing money for speculation more expensive, such liquidity out of the global economy, and reduces demand for raw commodities. That tends to weigh on commodity prices.

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