|The reasons for that are several: competition from other currencies (ie a stronger Euro and Yen) encouraged forex traders to shift their bets elsewhere, inflation expectations limited expectations for the USD, and worries about trade wars introduced a risk factor that really moderated the Long Dollar trade.
Those factors are still in play – to different degrees one day to the next, sure, but in general. At the same time, risks are rising. Stock markets are more volatile, the dollar is not dominant, there are legion questions around demand for US Treasuries as the Fed reduces its balance sheet amidst a government that needs more debt to fund its budget, high yield debts are raising questions, and so on.
All those risks continue to encourage investment in gold. None are Stand Out Scary yet, which is why gold hasn’t made a major move. But investors are increasingly aware that risks are rising, which gives gold a very solid grounding.
However, all of that is happening amidst good, synced-up global growth. That growth is why the Fed can raise rates. And the more evidence we get of growth, the better base metals perform.
Higher copper, zinc, nickel, coal, and steel prices are boosting the share prices of base metal miners. Since the start of 2016 Vale is up %, Glencore is up 300%, BHP is up 35%, and Rio Tinto is up 46%. It’s basic math: higher metal prices mean they’re making more money.