Gold falls as the dollar strengthens
Over recent months there has been plenty of debate about what has been driving higher gold prices.
Gold reached a record high of $1,226.56 an ounce during trading this week, but finished more than 5% lower at $1,161.40 on Friday. This was the result of better than expected US unemployment data sending the US dollar higher, making gold seem less attractive.
There might be several reasons for the recent rally in the gold price.
The weakening US dollar is likely to have been the main reason. Investors buy gold because they see it as a safe investment. This is also why investors buy the US dollar, but in recent times the dollar has looked like less attractive than gold due to low interest rates in the US.
Further increases in the gold price from here look to be a bet against the US dollar.
With so many investors having piled into gold, it is telling what a sharp impact this better than expected US jobless data had on the price of gold, as a result of a stronger dollar.