Stronger dollar has gold reeling

The price of gold fell to $434.90(US) per oz at presstime, with analysts blaming a stronger U.S. dollar and falling grain prices for the decline.

“The U.S. dollar is strong, that’s the key,” said Toronto gold-price forecaster Martin Murenbeeld of M. Murenbeeld & Associates of the London morning fix, down almost $9 from the previous day’s afternoon fix and almost $30 from its $464.40 peak early in June.

Supporting a stronger dollar, Murenbeeld said, are lower interest rates, no recession and moderate inflation. Gold dipped to $426.15 at the end of February this year, and Murenbeeld suggests a rebounding dollar and oil prices in the $16-per-barrel range — similar circumstances at that time — could presage another fall in the gold price to the same, or even lower, levels.

Recent dry weather in North America has seen future prices for corn, soybean and other grains soar, but with the weatherman calling for rain in most parts of the U.S. Corn Belt, prices were off sharply. The grain selloff, according to analysts, acted to reduce fears of inflation and to send gold (and silver) futures tumbling.

The price of gold in London, which averaged about $446.50 in 1987, is averaging about $453 this year.