Futures for gold on Wednesday were tilting higher in choppy early action as precious metals traded against a backdrop of a weaker U.S. dollar and buoyant benchmark government bond yields.
The competing factors for bullion—dollar weakness that has provided recent support and rising debt yields that can undercut appetite for haven metals—has gold values hemmed to a relatively tight $1,800-$1,900 range around in December.
The U.S. currency as measured by the ICE U.S. Dollar index, a gauge of the unit against a basket of a half-dozen currencies, was trading at around its lowest level since April of 2018, while the 10-year Treasury note yield was holding around 0.94%, offering some potential competition for investors seeking safe-haven assets, wrote Marios Hadjikyriacos, investment analyst at XM, in a daily note.
“Finally, gold is struggling for direction as the year concludes. The yellow metal has been caught in a crossfire between a weaker US dollar and a slight recovery in real Treasury yields lately, leaving it trapped in a narrow range between $1860 – $1905 for now,” the analyst wrote.
Against that backdrop, gold for February delivery was trading $3.80, or 0.2%, higher at $1,886.70 an ounce, following a 0.1% gain on Tuesday.
Silver futures for March delivery were trading 26 cents, or 1%, higher to trade around $26.48 an ounce, after a 1.2% gain in the prior session.
Commodity markets were little-changed after a report in U.S. trade deficit in goods showed a climb to $84.8 billion in November from $80.4 billion in the prior period. A separate report on advanced U.S. inventories showed a rise of 0.7% in retail November, while U.S. wholesale inventories dipped 0.1% on the month.
A woman wearing a dress made of cash, Germany, 1923.
THESE are the shocking images that reveal the full horror of hyperinflation in post Great War Germany ñ when money was literally worthless. In 1923, Germany was hit by one of the worst cases of hyperinflation in history, with 4.2 trillions marks worth just one American dollar. This out-of-control inflation began somewhat mildly during World War I, as the German government printed unbacked currency and borrowed money to finance military expenditures. The strategy was to pay off the debts by seizing resource-rich territories and imposing reparations on the vanquished Allies. But when Germany lost the war and ended up with massive debts, including huge reparations to be paid to the Allies under the Treaty of Versailles. The country found themselves in economic crisis and increasingly unable to afford the hefty reparation payments.
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