Gold investors are just not feeling the love, once again left to wonder why gold prices are going down.
The yellow metal dipped again Thursday, with gold for June delivery ending down $10 at $1,386.10 an ounce. It was the sixth consecutive trading day of declines and marked a four-week low for the metal.
With equity markets continuing to log record highs, and economic data showing some signs of improvement, safe haven gold looks nothing like its moniker.
Fueling gold's recent rout is not one thing; it's a combination of things.
Here's why gold prices are going down this week.
Why Gold is Down
Stronger Dollar: Of late, the U.S. dollar has jumped against other currencies. On
Wednesday, the greenback hit its highest level against the euro since early April.
The U.S. Dollar Index, a measure of the dollar against a basket of major currencies, has climbed 5% year-to-date--a major move in currency terms. And, since gold is priced in U.S. dollars, it has become appreciably more expensive for foreign investors.
Money Morning Global Resource Specialist Peter Krauth explains, "The U.S. dollar is a continuing headwind for gold, and virtually all commodities for that matter, thanks to its recent surge. I think one main reason is the strength in U.S. stock markets. Likely, foreign investors, both retail and institutional, are jumping on this bandwagon, and buying U.S. stocks.
"That requires U.S. dollars," Krauth continued. "So they first need to sell their currencies to buy dollars, and then put them to work in the markets, creating extra demand for U.S. dollars. As well, a cascading Japanese Yen has some looking for cover under the greenback."
Record Rallies: Global stock market rallies have lured investors from gold.
The Dow Jones Industrial Average on Wednesday posted its twentieth record-setting day of 2013, and the Standard & Poor's 500 Index finished at its fifteenth fresh high for the year. Meanwhile, the Nasdaq is trading at lofty levels not seen since October 2009.
Yet, even as benchmarks march towards resistance levels, bulls maintain equities still have upside.
