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Investors Continue Selling Dollars for Gold, Currency Counterparts

Investors Continue Selling Dollars for Gold, Currency Counterparts

2011-07-29 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%.

---------------------------------------------------------------------------------------------------------------------------------

Gold

USD/CAD

AUD/USD

NZD/USD

EUR/USD

GBP/USD

USD/JPY

USD/CHF

3 Day 15 Min

-0.37

0.44

0.51

0.37

0.49

-0.45

-0.60

1 Week 60 Min

-0.20

0.49

0.55

0.25

0.46

-0.65

-0.81

2 Week 60 Min

-0.93

0.87

0.82

0.80

0.86

-0.84

-0.85

1 Month Daily

-0.72

0.49

0.84

-0.37

0.67

-0.93

-0.94

Gold-FOREX Correlations for last week can be found here.

Weekly Commentary: Despite last week’s mild recovery in gold’s correlations with the US dollar, this week’s 11th hour debates in the US House of Representatives once again caused panic in the markets. Traders continued to sell US dollar to buy safe haven assets including gold, the Swiss franc and the yen. Accordingly, long term correlations between gold and the CHF and JPY all passed over 90% during this week.

More information about the debt ceiling can be found here.

The shift away from the Greenback was profound in all currencies, in the shorter term and over the past weeks as investors protected themselves from potential dollar fallout. Even yield currencies including the Australian dollar and the Euro gained with gold during the flock away from the dollar. Although the New Zealand dollar’s correlation with the yellow metal also increased, the gain was most likely due to increased expectations that the RBNZ will raise rates by the end of this year.

Gold-Forex_Correlations_07292011_body_Picture_1.png, Investors Continue Selling Dollars for Gold, Currency CounterpartsGold-Forex_Correlations_07292011_body_Picture_2.png, Investors Continue Selling Dollars for Gold, Currency CounterpartsGold-Forex_Correlations_07292011_body_Picture_9.png, Investors Continue Selling Dollars for Gold, Currency CounterpartsGold-Forex_Correlations_07292011_body_Picture_10.png, Investors Continue Selling Dollars for Gold, Currency Counterparts

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

Gold-Forex_Correlations_07292011_body_Picture_11.png, Investors Continue Selling Dollars for Gold, Currency CounterpartsGold-Forex_Correlations_07292011_body_Picture_12.png, Investors Continue Selling Dollars for Gold, Currency Counterparts

Written by David Liu, DailyFX Research

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

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