Gold closed today's European session higher in Dollars for the first time since Weds last week.
Strong economic data from Germany plus a wipe-out in Bangkok and bargain-hunting by gold buyers pushed gold higher from 7-week lows hit in the morning.
"It's purely a dollar move," said one European trader to Reuters. "There's really been no other factor in the market lately." But he missed the shock of Thailand's stock market losing $23 billion overnight after the Bangkok government said it would penalise foreign investors who withdrew their money in less than 12 months.
Foreign investors promptly withdrew their money – and the Thai government was forced to withdraw its threat.
The risk of exchange control on foreign investment "is offering some support to gold," reports one US dealer. "A lot of traders automatically think of the currency crisis in the mid-1990s."
The threat of a real currency crisis in the US Dollar has also boosted the Euro and Sterling against the Greenback, clipping gold gains for British, German and French investors. But gold remained up for the day at the end of Eurozone trade.
"Investors remain concerned by the outlook for the US dollar and gold is attracting attention as a diversifier of risk," said Barclays Capital in a report. Today the Euro rose on strong German business sentiment data, even as Washington shocked Wall Street by reporting a sharp rise in US wholesale prices.
Will US equities soon stop pretending there's nothing wrong with the US economy? For the latest analysis by Dr. Kurt Richebächer, click here now...