Currency and gold correlation
Before we clarify the relationship between currency trends and gold, we first need to understand that the dollar and gold fit is not very high.
Usually, the dollar appreciates and the gold price falls. vice versa.
The traditional logic is that when the economy is unstable, investors will short the dollar and choose gold.
Unlike other assets, gold can maintain its inherent value, or it has its own flash point.
Today, the reverse relationship between the dollar and gold still exists, although the forces behind it have changed.
Because of the preference for the safe haven of the US dollar, when the US or the world economy is in trouble, investors will choose the US dollar in most cases.
When signs of growth appear, the opposite happens.
Take a look at this amazing table below:
At present, Australia is the third largest gold digger in the world… We refer to the world’s gold producer, which sells approximately $5 billion worth of gold each year.
Historically, the correlation between AUD/USD and gold prices has been as high as 80%.
Do not believe? Please see the picture below:
Worldwide, the Swiss currency Swiss franc has a strong connection with gold. With the US dollar as the base currency, when the price of gold falls, the USD/CHF usually goes higher.
Conversely, when the price of gold rises, the USD/CHF will go lower. Unlike the Australian dollar, the Swiss franc has the same trend as gold because the 25% of the currency issued by Switzerland is supported by gold reserves.
Isn’t this wonderful?
The relationship between gold and major currencies is just one of the problems we have to solve.