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Gold Gains Against European Currencies as Contagion Fears Spread

Gold Gains Against European Currencies as Contagion Fears Spread

2011-07-08 02:36:00
David Liu, Technical Strategist
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The following table includes the correlation between gold and the most popular currency pairs over various timeframes. A value close to +1 indicates a strong positive relationship between gold and the pair, while a value close to -1 indicates a strong negative relationship. Colored values indicate week-to-week changes of over 30%.

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Gold

USD/CAD

AUD/USD

NZD/USD

EUR/USD

GBP/USD

USD/JPY

USD/CHF

3 Day 15 Min

0.07

0.58

0.18

-0.84

-0.77

0.01

-0.42

1 Week 60 Min

0.43

-0.11

0.06

-0.93

-0.75

0.58

-0.80

2 Week 60 Min

-0.26

0.20

-0.44

0.70

0.66

-0.46

-0.75

1 Month Daily

0.12

-0.08

-0.17

-0.16

0.44

-0.42

0.23

Weekly Commentary: Despite the sovereign debt crisis in Greece coming near an end after last week’s parliamentary votes, the fear of contagion led headlines this week’s trading session. Investors exited risky currencies – particularly the Euro and British pound – and bought US dollars and Swiss francs as havens to protect against possible consequences. Moody’s Investor Services cut Portugal’s credit rating to junk on Tuesday, and cited a negative outlook.

Furthermore, a interest rate hike of 0.25% by the People’s Bank of China citing continued inflation pressures reduced demand for industrial metals such as silver, copper and PGMs. Because of gold’s current safe haven status, commodity traders also exited positions in the lesser nobles and base metals and entered gold. Despite stronger metals prices on a weekly basis, the Australian dollar was little changed against the United States dollar due to fears of a more aggressive Chinese slowdown.

Gold-Forex_Correlations_07082011_body_Picture_1.png, Gold Gains Against European Currencies as Contagion Fears Spread

Gold-Forex_Correlations_07082011_body_Picture_2.png, Gold Gains Against European Currencies as Contagion Fears Spread

Please note: Chart uses franc rate as CHFUSD to show safety correlation with gold.

Gold-Forex_Correlations_07082011_body_Picture_3.png, Gold Gains Against European Currencies as Contagion Fears Spread

Gold-Forex_Correlations_07082011_body_Picture_4.png, Gold Gains Against European Currencies as Contagion Fears Spread

Written by David Liu, DailyFX Research

provides forex news and technical analysis on the trends that influence the global currency markets.

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