US Dollar, Gold & Inflation

A good indicator as to why US Inflation isn't a cause of concern yet!

From CNN Money By Tomi Kilgore, MarketWatch
Last Update: 8:21 AM ET May 22, 2006

Gold futures fell early Monday, and appeared set to suffer their fourth-straight loss, with gains in the U.S. dollar helping apply the downside pressure.

Gold for June delivery was down $10.50, or 1.6%, at $647 an ounce in electronic trading. It hit a low of $636.80 earlier in the session, the lowest price seen since April 28.

The StreetTRACKS Gold exchange traded fund (GLD : 65.59, -1.87, -2.8%) lost $1.28, or 2%, to $64.30 in Instinet pre-open trading.

The front-month contract had lost $35.40 an ounce over the previous three sessions, and had dropped $64 an ounce since closing at a 26-year high of $721.50 on May 11.

The U.S. dollar was up 0.7% against the yen at 112.48, and reached a 2-week high of 112.94 in overnight trading. The buck was 0.1% better vs. the euro at $1.2750.

Gold is widely viewed as a hedge against an increase in inflation, while a rising dollar is seen as helping contain inflation.

In other metals markets, July silver fell 19 cents, or 1.5%, to $12.17 an ounce and July copper slumped 9.4 cents, or 2.7%, to $3.3750 a pound.

July platinum shed $33.40, or 2.5%, to $1,280 an ounce and June palladium dropped $10.80, or 3.1%, to $341 an ounce.