The current surge in gold prices is leading to a record high. The US dollar is falling, and the Australian dollar is rising. The key points of the attached note are as follows:
The US dollar looks to have peaked, in part reflecting reduced safe haven demand with more downside likely.
The gold price has broken out to a record high, reflecting a declining US dollar, investors demand for an inflation hedge and a fall in the opportunity cost of holding gold. More upside is likely.
The Australian dollar has broken higher, reflecting the declining US dollar, along with higher commodity prices and it’s likely the trend will remain up.
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