Gold Prices and the U.S. Dollar

U.S. dollar weakness sends gold prices higher

Gold prices often move inversely to the U.S. dollar movement on the FX market. Right now, U.S. dollar weakness is supporting gold prices in commodities trading. Indeed, as the greenback weakens, traders bid up gold prices. MarketWatch reports on the impact of dollar weakness on gold prices right now:

"The gold price is predominantly driven by the dollar weakness at the moment," said analysts led by Barbara Lambrecht at CommerzBank. "As long as the dollar remains on the back foot, gold should continue to rise."

Additionally, the strong gold prices will serve to help hold the dollar lower in forex trading. It is an interesting relationship that was interrupted earlier this year when the financial crisis and recession forced investors to use both as safe haven investments. But, now that there is optimism about the economy, the inverse relationship is returning.