Precious metals prices and farm commodities soared Monday on futures exchanges after five nations agreed to take steps to depress the value of the U.S. dollar in an attempt to help restore the balance of trade between the United States and other countries.
As a result of the announcement, the dollar fell sharply in trading against major foreign currencies, prompting heavy buying in grain and precious metals futures.
“It was an obvious vote of confidence in a policy that will even things out around the world,” said Steve Chronowitz, director of commodity research in New York with Smith Barney.
If the plan succeeds, Chronowitz said, “it should improve business conditions in the United States and worldwide.”
However, he said, such benefits will be a long time coming, “and we don’t have enough information yet as to whether . . . there’s really something substantive that will cause this to happen.”
He said the move helped the gold market because the precious metal is primarily priced in dollars, and a lower-valued dollar in relation to foreign currencies would increase the buying power of foreign investors.