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Gold Correlation with Risk Still Robust Following FOMC Decision

Gold Correlation with Risk Still Robust Following FOMC Decision

David Liu, Technical Strategist

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

-0.80

0.75

0.86

0.77

0.89

-0.81

-0.84

1 Week 60 Min

-0.86

0.83

0.90

0.85

0.86

-0.52

-0.89

2 Week 60 Min

-0.92

0.89

0.85

0.94

0.89

-0.06

-0.94

1 Month Daily

-0.76

0.93

0.96

0.46

0.45

0.06

-0.62

Gold-Forex Correlations for the previous week can be found here.

Weekly Commentary: Gold correlations shifted to heavily inverse dollar this week, following both risk currencies such as the Australian dollar and the Euro and haven currencies including the yen and Swiss franc, after the Federal Reserve’s view of keeping rates low until the beginning of 2014. Even though markets were expecting an announcement of additional asset purchases by the central bank, many took the promise as dovish and indications that the bank may be ready to provide additional liquidity.

Equity markets and risky currencies were bid higher following the statement as risk appetite was fueled by what many saw as the equivalent of another round of asset purchases, commonly known as quantitative easing. Despite this extended period of lower rates, markets will continue to watch developments in Greece following Monday’s EU leaders’ summit.

Gold-Forex_Correlations_01302012_Gold-Follow-Risk-After-FOMC_body_Picture_1.png, Gold Correlation with Risk Still Robust Following FOMC DecisionGold-Forex_Correlations_01302012_Gold-Follow-Risk-After-FOMC_body_Picture_2.png, Gold Correlation with Risk Still Robust Following FOMC DecisionGold-Forex_Correlations_01302012_Gold-Follow-Risk-After-FOMC_body_Picture_3.png, Gold Correlation with Risk Still Robust Following FOMC DecisionGold-Forex_Correlations_01302012_Gold-Follow-Risk-After-FOMC_body_Picture_4.png, Gold Correlation with Risk Still Robust Following FOMC Decision

-- 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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