Jun 04

The Correlation Between Gold, Oil And Currency Markets – Time To Trade The Us And Australia Dollar

A lot of people are now seeking the correlation of gold, oil and also the foreign currency markets for example the US dollar. Today just about all currencies are correlated with gold and oil prices.

Oil is the main commodity which drives the world financial systems. Most of us have observed the net impact of substantial oil prices and how that makes everything else considerably more costly since the cost of transportation rises. This therefore influences the currencies market.

You’ll find however four currencies that show a rather robust correlation with gold and oil. These four are known to dealers as the commodity currencies.

The Commodity Currencies

The four commodity currencies which are highly correlated with gold and oil are the Canadian Dollar (CAD), Australian Dollar (AUD), New Zealand Dollar (NZD) as well as the essential Swiss Franc (CBF). Many individuals believe that the NZD is a hot favorites with carry traders however this really is old news. The CAD is particularly correlated with oil nevertheless less so with gold. If you’re searching for the major 3 currencies correlated with gold then it’s important to look to the AUD, NZD, CBF.

We all know that gold is the fall back position when the global financial markets are struggling. This had resulted in such high prices for gold in the last few years. We have always had a captivation with gold going back to the Californian gold rush and beyond; since we still dig up gold treasures from ancient Egypt today.

This kind of love of gold persists with traders right now; and in a moment of political and economic crisis gold is king and seen as a safe haven for investments.

The United States Dollar Is Negatively Correlated With Gold

This has led to people moving from the US Dollar (USD) as the worlds currency; people after that moved towards the Euro but today individuals see gold as being a safe shelter until there are actually signs of a recovery. At this particular moment in time the correlation of gold and the USD is what we call negatively correlated. We now call gold the Antidollar.

The markets have evolved and now we have a global financial system with all the markets interconnected. Regardless of which markets you trade in whether it be stocks, commodities, futures or foreign exchange they all are correlated and are employed by dealers while forecasting. It has led to gold right now achieving prices that we haven’t witnessed before. This has put Australia in an desirable position.

Australia is really a enormous exporter of gold. The correlation of gold and the US and Australia Dollar is considerable. This means if the gold price is high the AUD tends to appreciate. While doing so the United States Dollar gets weaker. The net outcome is a double impact on AUDUSD. What this means is it has never been a better time for you to buy and sell AUDUSD.


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