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Originally Posted by FXdudy
If USD continues to fall gold will be goin’ higher. But this speculative growth is not provided with fundamental factors. It means that at some moment when the U.S are in the phase of completion of struggle with recession USD will stop it fall and start strengthening. Then speculative funds will be took out from gold and the result will be rapid collapse of USD.
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I'm trying to work out the logic in that analysis.
USD down, gold up. Yup, sounds reasonable, flight to safety/quality.
USD stops falling it starts to strengthen. Yup, logical.
Gold down, dollar collapse? Why? Where are the speculative funds from gold going to go if not back into the US when the time is right?
The US dollar will never have a wholesale collapse, central banks will intervene before that happens. Do you really think the BOJ or ECB, or even the Fed will just stand aside and allow speculators to dictate the prosperity of major economies? A dollar freefall will never happen.
There's talk of BOJ intervention at 80 Usd/Jpy, and the ECB have hinted they would be uncomfortable with Eur/Usd above 160.
Ultimately the price of oil will dictate where we all go from here, as it always has done.