5 Reasons Why Gold Hit a Record High, Triggering Further Gains in the Australian Dollar

January 8, 2008

Here are the 5 reaons why gold hit a record high above $880 oz today:

1. Pending home sales fall 2.6 percent, signaling more difficult times ahead for the housing market
2. Hawkish commments about inflation from Fed President Plosser this morning is making gold a prime inflation hedge
3. Traders believe that the only true safe haven currency is gold
4. Stocks continue to sell off and in the big trends of the 1980s to 1990s, gold and equtities had an inverse relationship
5. Oil prices are higher, the US dollar is weaker

As a result, the Australian dollar is up more than 1 percent. We expect further gains in the Aussie ahead of the Australian retail sales and trade balance numbers this week. The last employment report from Australia was surprisingly strong, so we expect consumer spending to be firm as well. 90 cents, here we come!

My favorite is actually buying AUD/CAD because I expect to see $1000 gold before $100 oil.

Posted in Australian Dollar, Gold