El-Erian says soaring gold is driven by dollar diversification
me-metals: Mohamed El-Erian says that gold surging to a fresh record reflects how global financial institutions are deliberately diversifying away from the US dollar.
According to me-metals cited from mining.com, Bullion climbed to its highest mark ever, around $2,758.49, on Wednesday as investors focused on key macro risks — from continued turmoil in the Middle East to the US election — in the weeks ahead. So far this year, gold is up 32%, outpacing the S&P 500 Index’s 23% gains.
“When we try to relate the moves in gold this year to traditional, financial and economic variables — interest rates, the dollar — the relationships have broken down,” said El-Erian, the president of Queens’ College, Cambridge, on Bloomberg Television Friday.
The “secular” move can be attributed to two fundamental drivers, he added.
“One is the slow diversification away from the dollar in the reserves of central banks around the world,” he said. “The other is a slow diversification away from the dollar payment system.”
While the move has been slow, “the bad news is the momentum is building up,” said El-Erian, who is also a Bloomberg Opinion columnist.
Recent events have accelerated the trend toward gold, according to El-Erian.
Chief among them is Russia’s ability to maintain trading relationships and grow even after the exclusion of its major banks from Swift, a global financial messaging service. While recent Swift data shows that the share of dollars in international payments has held relatively stable in recent years, just below 50% and far exceeding other currencies, transactions involving the yuan have risen in recent months.
The other event is the Middle East, El-Erian said, adding that a majority of countries have viewed US as an “inconsistent backer” of human rights and international law.
source: mining.com
Related News
Top News
Six last month
MinRes halts Bald Hill mine amid lithium price rout
Gold price faces worst week since 2021 as Fed signals no rate-cut rush
Iran Alloy Steel Company intends to purchase 12 tons of ferrotungsten through public tender
Iran Alloy Steel Company intends to purchase 150 tons of Low-Carbon Ferro Manganese through public tender
Swapping aluminum for copper will maintain China’s resources, group says
Gold loses some luster after Trump’s decisive win
Hedge funds slash bullish wagers on gold over Trump election win
Iron ore price flirts with key $100/t level on firm demand, China stimulus hopes
Families gather at South African mine shaft where hundreds are feared stuck underground
BHP to spend up to $14 billion on Chilean copper expansion
Chile’s rare salt flat fish faces threat from lithium mining project
British Columbia creates new mining ministry to tackle critical minerals amid doubts over capacity
China’s germanium, gallium ban could cost the US $3.4 billion
South Africa police standoff with illegal gold miners escalates
Iran Alloy Steel Company intends to purchase 150 tons of Low-Carbon Ferro Manganese through public tender
Iran Alloy Steel Company intends to purchase 12 tons of ferrotungsten through public tender
Iron ore price flirts with key $100/t level on firm demand, China stimulus hopes
Newmont sells Ontario gold mine to Orla for $850 million
BHP warns Australian mining not ready for low-cost competitors
Iran Alloy Steel Company intends to purchase 12 tons of ferrotungsten through public tender
Iran Alloy Steel Company intends to purchase 150 tons of Low-Carbon Ferro Manganese through public tender
Chile’s rare salt flat fish faces threat from lithium mining project
British Columbia creates new mining ministry to tackle critical minerals amid doubts over capacity
Newmont sells Ontario gold mine to Orla for $850 million
BHP warns Australian mining not ready for low-cost competitors
Resolute Mining says it will pay Mali $160 million in tax dispute
Trump chooses oil fracking boss as energy secretary
Gold loses some luster after Trump’s decisive win
