RE: Gold and Gold StocksThis may help explain gold stock downward move on a gold upday?
Slowdown in Europe
Still, gold may fall should a slowdown in the U.S. spread to Europe, forcing the European Central Bank to cut interest rates, weakening the currency. European retail sales unexpectedly fell in February and traders raised bets the ECB will reduce rates this year.
``The influence for gold is coming from the dollar,'' said Tom Hartmann, an analyst at Altavista Worldwide Trading Inc. in Mission Viejo, California. ``If the U.S. economy slows, that's going to be a drag on Europe, and the euro may not be able to strengthen further against the dollar.''
The Federal Reserve has cut U.S. interest rates six times since September, dropping the target federal funds rate to 2.25 percent from 5.25 percent. The ECB has kept its benchmark lending rate at 4 percent since June 2007.
Five of the past six bear markets for the U.S. currency have spurred rallies in gold. Bloomberg.