Gold – The Latest Surprise
Gold has once again surprised. This time, news from “outside the market” set in motion a chain reaction that knocked gold for a loop.
First, the British confirmed the country was withdrawing from the European Union . . . and sooner than most had expected. This triggered an instant devaluation of the British pound and a corresponding rise in the U.S. dollar in world currency markets.
Not surprisingly, as the dollar rose, gold took it on the chin, as it most often does when the U.S. currency appreciates.
At the same time, contributing to the dollar’s recent appreciation has been a string of favorable U.S. economic statistics that, in turn, raised expectations the Fed might sooner rather than later raise short-term interest rates, perhaps even by yearend.
Once the dollar started its ascent, gold’s short-term fate was sealed . . . and its downward decline was further fueled by technical selling at key chart poi…