Gold and U.S. Dollar Decouple Again

Occasionally the economic forces come into alignment and gold and the U.S. dollar abandon their usual inverse relationship and decouple.

In other words, as gold skyrocketed in price recently, the U.S. dollar rose in value as well. That means the support for gold prices rising, which is based upon the quantitative easing, or inflating, by the Federal Reserve recently, when it announced it would pump another $600 billion into the economy over the next eight months or so.

Depending on whether or not the economy responds, which it didn't in the first round of QE, the Federal Reserve is poised to offer another round after that if they need to.

That will continue to offer support to gold prices as long as the implementation and outlook is quantitative easing will continue on.

with the inevitable increase of inflation coming from the actions of the Fed, that will also push the price of gold to higher levels as well.

The bottom line is gold is looking so strong now and going forward, that it can at time overcome the usual inverse relationship with the U.S. dollar, which to me is one more indicator of its price durability.

Of course the U.S. dollar will continue on its loss of value, even if it does occasionally get a bump up in value.