We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • Why financial market traders must monitor both monetary and fiscal policy? Find out from @MartinSEssex here:https://t.co/Fkzk88Y5gm https://t.co/beKjEODs2y
  • RT @RichDvorakFX: @Investingcom Seems to me like investors ‘high’ on central bank liquidity are fiending for more and staring down the edge…
  • Get your snapshot update of the of relative currency strength and exchange status from around the globe here: https://t.co/DmhBkd4B0k https://t.co/b8RNJQKE1m
  • The Spinning Top candlestick pattern forms part of the vast Japanese candlestick repertoire with its own distinct features. Gain a better understanding of the spinning top candlestick here: https://t.co/yXomAftdv8 https://t.co/wOQAHZVnxB
  • Forex trading, which is the act of exchanging fiat currencies, is thought to be centuries old – dating back to the Babylonian period. Learn about the history of Forex here:https://t.co/ePTJlbUP7c https://t.co/WS2LkCt9gX
  • Two major events will dominate #Euro trading in the coming week: an #ECB meeting on Eurozone monetary policy, followed by an #EU summit to reach agreement on a recovery fund. Get your #currencies update from @MartinSEssex here: https://t.co/wnXjTDizMv https://t.co/tmxDfkgmSv
  • There are many different types of forex orders, which traders use to manage their trades. While these may vary between different brokers, there tends to be several basic FX order types all brokers accept. Learn about different FX order types here: https://t.co/lIJdiz4xSz https://t.co/UQRaKusFP7
  • The continuity seen across these volatility cycles is a good thing. Historical precedence offer a blueprint for identifying conditions supportive for a vol-event to occur, and how they may unfold. Deepen your knowledge of historical volatility here:https://t.co/vg7w10la3j https://t.co/nUvvI3WQpx
  • Australian Dollar is up fractionally this week with Aussie stalling just below the yearly range highs. Here are the levels that matter on the $AUDUSD technical chart. Get your #currencies update from @MBForex here: https://t.co/jYzBK1qH4s https://t.co/gYj4tFbsGS
  • What is the road ahead for equities this coming week? Check out my fundamental outlook below! #DowJones #SP500 #DAX30 #FTSE100 https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2020/07/11/Dow-Jones-SP-500-DAX-30-FTSE-100-Outlook-Stocks-Week-Ahead.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/HjIBDKqwvO
Guest Commentary: Can We Predict Price of Gold via the U.S. Money Base?

Guest Commentary: Can We Predict Price of Gold via the U.S. Money Base?

2012-02-09 16:27:00
Lior Cohen, Energy Analyst for Trading NRG,
Share:

I have already referred to the relation between the expansion of U.S. Monetary base and the development of gold. As the U.S. Monetary base expands, the price of gold tends to increase as well.Can we use this relation to learn more on the future development of gold price? See here for more on the relation between gold and US monetary base.

The following chart presents the development of gold and U.S. Monetary Base during 2011. According to the chart, U.S. Monetary base expanded mainly during the first half of the year due to the Fed's second Quantitative Easing Plan.

In fact, the relation between lagged by one period U.S. Monetary base percent change and change in gold is positive and mid-strong. From March 2009 to December 2011 the linear correlation between the two was 0.2798. This relation might suggest that if U.S. Monetary base will continue to expand, gold price might follow the next month and rise.

Guest_Commentary_Can_We_Predict_Price_of_Gold_via_the_U.S._Money_Base_body_Monetary_base.png, Guest Commentary: Can We Predict Price of Gold via the U.S. Money Base?

Another way to look at the relation between the monetary base and gold price is by using the U.S. gold reserves, which currently stands at 8,133.5 tonnes (or 261 million t oz.); by using the gold reserves I can calculate the "gold base price" which is U.S. Monetary base divided by U.S. gold reserves. For the December this rate reached $9,984 per t oz. compared with the actual price of gold, which was $1,644. By dividing the lagged by one period gold base with gold price we get the ratio between the two.

This relation should be taken with a grain of salt, but might offer another perspective on the future development of gold. If the upcoming U.S. Monetary base (for January) will expand again it could suggest gold will continue to rally during February.

For further reading:

Will the Silver and Euro Rally Continue? Are they related?

Did the Liquidity Trap Cause the Rally in Gold Price?

By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG

Would you like to see more third-party contributors on DailyFX? For questions and comments, please send them to research@dailyfx.com

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

DISCLOSURES

News & Analysis at your fingertips.