The yellow shiny metal inclined at the start of today's trading as the dollar started to ease in front of other currencies whereas oil prices dropped.
The yellow metal reached a high of $867.35 an ounce as a fast reaction to the dollar that weakened, knowing that these two have an inverse relation, as soon as one goes up, the other will go down. The safe asset is now looked at as a hedge against a weaker dollar and therefore it became a sort of a yellow magnet that will pull investments towards it.
Reaching different records the past days, oil prices declined today but remained high above $120 a barrel reaching a high of $124.53 a barrel. Crude prices fell as President Bush was told by the Senate to cut short oil shipments into the government's emergency reserve, besides the fact that the government said that crude oil inventories were up, which was expected.
The green currency lost against major currencies today as the CPI released yesterday showed a decline in the inflation, a decline that was actually deeper than what was expected. So as the inflationary pressures in the US economy eased.
The feds are not to be in a hurry to reverse the easing they indulged in since September taking rates down to 2.0%. That was another reason for gold to lack stronger positive momentum and just advancing on the back of a weak dollar and supported by a rising euro with GDP data on the queue which is to show how well the euro area coped with downside pressures.