Currency war appears to rage throughout the world, and the strife is boosting gold, experts say.
The euro plunged to an 11-year low against the dollar last week amid concern about the Swiss National Bank's decision to drop its ceiling for the franc and anticipation that the European Central Bank (ECB)'s major quantitative easing program announced Thursday.
The ECB's decision to expand its asset purchase program to €60 billion a month could push the euro down even further, extending a currency war that has gone on for more than a year, some experts say.
That currency war is good for gold, which has jumped 9.4 percent so far this year. It hit a five-month high of $1,305.25 an ounce Wednesday before slipping to $1,293.70 in late afternoon trading.
"Europe is certainly the leading focus right now" for the gold market, veteran gold analyst Bill O'Neill, founder of LOGIC Advisors, a commodities investment company, told
The Wall Street Journal.
"There's a fear of currency wars and currency volatility, and there's a high level of uncertainty surrounding the whole euro area."
In addition, speculation that Greece might leave the eurozone is lifting gold.
"The stimulus coming in Europe and the possibility of Greece leaving the euro is turning people to gold as a haven," said George Gero, senior vice president with RBC Capital Markets Global Futures.
"It will really be a nail-biter for the investor in the next week or two, and it will continue to bring volatility into these markets," he said.
To be sure, not everyone feels confident that gold's recent rally will continue.
"It's too early to decide if gold is really out of the downtrend," Lance Roberts chief strategist at STA Wealth in Houston, told
Bloomberg. "What has changed over the past few months is that fear is coming back. Some investors are buying gold to hedge against uncertainties."
Falling oil prices are another of those uncertainties.
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