Price of gold was fueled by a decline in the U.S. dollar against a basket of foreign currencies

The gold price climbed $16.51, or 1.0%, to $1,678.76 per ounce Wednesday afternoon amid a broad-based rally on Wall Street. Strength in the price of gold was fueled by a decline in the U.S. dollar against a basket of foreign currencies. The SPDR Gold Trust (GLD), a proxy for the gold price, rose $1.43, or 0.9%, to $163.53 per share.

Commenting on the gold price, RBC Capital Markets senior vice president George Gero wrote in a note to clients that “We believed a higher trading range [was] imminent after $1,675 as better momentum, higher volume, higher moving averages and higher open interest came into play.”

In recent weeks the correlation between gold and other asset classes – particularly the U.S. dollar and euro currency – have noticeably changed.

While the gold rallied alongside the dollar as a safe haven for the majority of the summer, over the past month it has traded more in line with the euro currency as a riskier commodity.

Analysts at UBS elaborated on these developments in a note to clients on Wednesday.

“Gold has stepped into new territory, acting like a hybrid of a risk asset and a safe haven, as it tries to find a balance between the two opposing forces,” the firm wrote. ”This has made trading the gold very challenging, as while one can have a view on an event such as U.S. payrolls for example, deciphering how gold reacts has become a lot more difficult.”

UBS added that ”While buyers are nimbly returning, it is no surprise that there is caution given the struggle for conviction.”

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