High US Dollar Tearing the World Apart

4 October, 2023
As at 9am, AEST.

Spot pricing for Gold $AU2897

Spot pricing for Silver $AU33.77

Spot pricing for Platinum $AU1397

In the realm of economic dynamics, the consistent surge in interest rates by the US Federal Reserve is making waves globally. The result? A robust US dollar flexing its strength, casting a shadow over other currencies, Australia included.

Down Under, where we rely on imported tech gadgets and fuel for our engines, the repercussions are palpable. The surge in inflation? Attributed to the US dollar powering its way to supremacy.

But here’s the twist: even if Aussies opt to tighten their purse strings to combat inflation, the weakening local currency continues to propel our Cost of Living (CoL) upwards. Picture our daily essentials catching a ride on the US dollar express.

The solution? A swift, albeit not-so-pleasant fix – another round of rate hikes. It's akin to combating fire with fire. Not long ago, the US was slashing rates to ensure its exports remained budget-friendly. Now, the tables have turned, and we find ourselves caught in the economic crossfire, witnessing our dollar engaging in a seesaw dance against the greenback.

While Gold and Silver haven’t seen much of the spotlight in the past month, it is important to note that Precious metals pricing is predominantly built on the US dollar and as this has been strengthening, we’re seeing a depressed bullion price, predominantly in US dollar terms.

It’s important to keep an informed perspective, and also imagine the scale of the rubber-band being pulled back through continued rate hikes. As the US dollar continues to strengthen, as some point it will need to unwind.  

Gold daily, with 200MDA

Silver daily, with 200MDA