Gold and the Dollar in a Flip-Flop

A "Reagan euphoria "and high interest rates spur a surprise

During the past four years the American dollar has sagged deeper and deeper, while the price of gold tended to soar higher and higher. In the past two weeks it has been the other way round. Gold has lurched lower, as the dollar has risen.

The effect of this role reversal has been to discombobulate money markets everywhere, and last week the turmoil intensified. In Frankfurt, the deutsche mark slumped to a three-year low of 2.16 to the dollar, forcing the West German Bundesbank and the U.S. Federal Reserve into an unusual rescue...

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