Strongest Gold Demand Comes From Global Emerging Markets
Tiho Brkan | Apr 09, 2014 07:27AM ET
On this blog, we usually follow the price of Gold in US dollar terms. Since the USD is a reserve currency (for now at least), majority of the global trade as well as raw material exchange is done in this currency. However from a investor point of view, Gold priced in other global currencies sometimes offers clues to the direction of the metal itself, well before it happens in its USD price.
Interestingly, the price of Gold in euros and pounds has recent made a lower low, unlike the USD price. Furthermore, due to the BoJ weakening currency policy, Gold priced in yen has held up relatively well, unlike the other developed nation currencies. The pattern of lower lows and lower highs in the euro and pound priced Gold markets could be a signal that further weakness will also occur in USD Gold price too.
However, it is just as important to track the price of Gold in currencies where demand is strong, historical link is alive and tradition towards Gold is respected. Several that I have chosen above include top consumers including India, China, Russia and Turkey.
Other than the Chinese yuan, other GEM currencies have suffered in recent years. Whether its the Indian rupee, Russian ruble or the New Turkish lira, all of these currencies have experienced substantial pressure against the US Dollar. Therefore, it should be no wonder as to why Gold prices held up better against these currencies. Finally, from a consumer point of view, higher Gold prices in local countries also hurts demand.
/h3
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.