(Gold: lower. After coming in for early support on news of strike action affecting mines belonging to gold fields of South Africa, values declined in line with platinum and New York advices as miners were encouraged to return to work by manage

(Gold: lower. After coming in for early support on news of strike action affecting mines belonging to gold fields of South Africa, values declined in line with platinum and New York advices as miners were encouraged to return to work by management promises of negotiation. The fall in oil prices also brought pressure to bear but good resistance at around the 400 dollars per ounce level permitted a brief rally. However, values suffered a late decline to below 400 dollars per ounce in line with New York as the dollar strengthened on news of a decline in the U. S. budget trade and a cut in the bank of Japan’s discount rate.)“…the dollar strengthened on news of a decline in the U. S. budget trade and a cut in the Bank of Japan’s discount rate.” How could the above-mentioned developments help strengthen the dollar?

“A decline in the U. S. budget trade” indicated that less dollars would be sold for foreign exchange for imports, thus changing the pattern of demand and supply for the USD in the currency market in favor of the dollar; “a cut in the Bank of Japan’s discount rate” means that the interest rate in Japan would have to be lower than before and that would drive investors to places like the U. S. offering higher rates for better yields and more dollars would he needed in the market, which was to result in strengthening the USD as well.