Gold stands to benefit from a currency war.
SAN FRANCISCO (MarketWatch) — Talk of a so-called currency war has been heating up, and it might finally light a fire under gold, too.
Efforts by countries such as Japan to boost growth with massive stimulus programs — which in turn have devalued their currencies, an aid to exports — can benefit prices for gold. These have started to alter the precious metal’s relationship with the foreign-exchange market and expand its role as a safe-haven asset.
“We are now moving irrevocably to a time when gold will measure currencies, not currencies measure gold,” said Julian Phillips, a South Africa-based contributor and founder at GoldForecaster.com.
Historically, the precious metal trades inversely to the U.S. dollar (US:DXY), as it did on Thursday and Friday. It was a usual story: gold prices fell sharply as the greenback strengthened at the expense of the euro (US:EURUSD) on Thursday and as the Japanese yen (US:USDJPY) weakened on Friday.