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Gold-FOREX Correlations in Transition Towards Safety as Markets Focus on EU

Gold-FOREX Correlations in Transition Towards Safety as Markets Focus on EU

2011-10-24 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

-0.46

0.51

0.40

0.33

0.02

-0.14

0.21

1 Week 60 Min

-0.11

0.12

0.34

0.12

-0.10

0.42

0.13

2 Week 60 Min

0.04

-0.04

0.01

-0.52

0.09

0.79

0.26

1 Month Daily

-0.41

0.19

0.41

0.10

-0.20

-0.23

-0.08

Last week’s commentary can be found here.

Weekly Commentary: Although correlations between gold and major currency pairs remains caught in the middle, the yellow metal this week made an impressive headway towards regaining its safe haven status. The continuation of the EU debt crisis regained the scrutiny of traders as leaders met throughout the week and on Sunday after last week’s Q3 earnings reports. Although the leaders failed to come up with a comprehensive plan to prevent contagion during the weekend summit, traders will be looking towards the final meeting this Wednesday between EU17 and EU27 politicians and finance ministers.

The yellow metal was also helped higher this week as Vice Chair Janet Yellen and Board Member Daniel Tarullo increased dovish rhetoric by mentioning the central bank might consider additional asset purchases, opening the way for another round of quantitative easing. As the equity markets remain volatile during the European sovereign debt crisis and while the global economy slows, the speculation for more easing in the world’s largest economy will increase and may drive gold’s reversal back towards a top of $1921.

Weekly Forecase: Gold Rebound May Gather Pace As Speculation for QE3 Resurface

Gold-Forex_Correlations_10242011_Gold-Risk_Correlations_In_Transition_As_Focus_on_EUR_USD_body_Picture_1.png, Gold-FOREX Correlations in Transition Towards Safety as Markets Focus on EUGold-Forex_Correlations_10242011_Gold-Risk_Correlations_In_Transition_As_Focus_on_EUR_USD_body_Picture_2.png, Gold-FOREX Correlations in Transition Towards Safety as Markets Focus on EU

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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