In the article, it is said: "Gold futures continued their risk-fueled bounce as concerns about Greek sovereign debt eased and the U.S. dollar faltered." As the Greece's budget deficit is eased, we may expect a strong support to the euro against the US dollar. The result of this is gold price increase. So, as the US dollar become weaker, the gold price will rise.
From this article, I realize that there is an inverse relationship between the gold price and the value of dollar compared to other currency. In other way, the US$ gold price and Dollar Index trend is moving in the opposite direction. It does not just happen daily or weekly but over a long period of time. By looking at the change in gold price, we may assume that US dollar value is also changing compared with other currency. It is a opposite change between fiat money and commodity money.
I think the bullish trend in gold futures has been a direct result of people’s expectations of future inflation. As people see a future in which inflation may eat away at earnings, they seek a safe haven for their cash. Gold has offered a great, inflation free, place of investment for times like now. I also believe that the upward trend in gold futures may be reversed when and if the global economy recovers. As people see recovery in global markets, they may see higher returns on their investments in other areas outside the market for gold.
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