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Gold-Forex Correlations Seen Amidst Long Term Shift, Risk Tracking Still High

Gold-Forex Correlations Seen Amidst Long Term Shift, Risk Tracking Still High

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

-0.73

0.57

0.77

0.51

0.46

0.24

-0.57

1 Week 60 Min

-0.29

0.64

0.65

0.51

0.50

-0.47

-0.53

2 Week 60 Min

-0.68

0.75

0.76

0.76

0.77

0.11

-0.75

1 Month Daily

-0.17

0.54

0.52

0.62

0.51

0.07

-0.61

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

Weekly Commentary: With the fear of Spanish debt contagion returning to the markets and the start of first quarter earnings releases of major US companies, gold correlations with major currencies remained largely unchanged from the previous week. Despite this, the stagnant longer term correlations between the precious metal and currencies may indicate that a larger fundamental shift may be around the corner.

Following the once again relatively dovish commentary last week from the Federal Reserve’s Janet Yellen and others, gold is once again holding its anti-dollar status as market continue to expect monetary tightening sooner than later as the recovery perceived as quite brisk. As both markets are within this larger narrative of higher US yields, gold is expected to retain its current risk status. While New Zealand will highlight this week’s economic docket, traders will be closely monitoring the state of the Spanish debt market, with two bond sales scheduled for this Tuesday and Thursday.

Gold-Forex_Correlations_04162012_Correlations_Seen_in_Middle_of_Shift_body_Picture_2.png, Gold-Forex Correlations Seen Amidst Long Term Shift, Risk Tracking Still HighGold-Forex_Correlations_04162012_Correlations_Seen_in_Middle_of_Shift_body_Picture_3.png, Gold-Forex Correlations Seen Amidst Long Term Shift, Risk Tracking Still High

-- 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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