Investing.com - Financial Markets Worldwide

Black Swans On The Horizon

ByGoldMoney News Desk
Published 03/26/2012, 07:44 AM
Updated 05/14/2017, 06:45 AM
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An unexpected drop in US home sales for February and a weakening dollar supported the gold price on Friday, with the April Comex contract settling up 1.2% at $1,662.40 per troy ounce. The silver price was the leader among precious metals, gaining 3% to settle at $32.27. As MarketWatch notes though, silver still closed down 1% over the week, while gold has remained flat since the middle of the month.

These markets remain indecisive at the moment because of the conflicting economic signals reverberating around the world. On the one hand, improving economic stats in the US and a lull in the eurozone crisis has cheered investors, and are encouraging gains in equities and commodities. But lurking behind the curtain are growing concerns about China, rising interest rates, and the geopolitical situation in the Middle East. The threat of an oil price “shock” caused by a war with Iran is cause for plenty of sleepless nights for western politicians, given that it would crush growth while also sending inflation surging.

How are central banks to respond to this scenario? If they ease in order to support growth, they pour petrol on the proverbial fire as far as inflation is concerned. But if they hike interest rates in order to fight inflation, they’ll send economies back into recession, and exacerbate the budget problems facing heavily indebted governments all over the developed world.

So it’s no wonder that few are sitting comfortably just yet. And with continuing moves by the likes of Brazil, Russia, India, China and South Africa to challenge the supremacy of the US dollar, huge shifts are afoot in the world of currencies – even if few yet appreciate the significance of these changes. Asia’s golden future has only just begun.

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