Gold to resume stronger USD correlation, headed lower

FX:XAUUSD   Gold Spot / U.S. Dollar
Gold             has had some precarious price action as of late and the media is all over it. Moreover, the recent acceleration to the downside has many confounded and attempting to catch a falling knife. Usually this signals capitulation and screams for a contrarian play. However, analyzing Gold's move in relation to the USD points to more pain for goldbugs.

Gold             is priced in USD, and like most other commodities , it trades relatively in line with the USD. Beginning in early January 2015 we saw Gold             move in sharp divergence to the USD. This divergence peaked at the end of January to the tune of an 18% premium to the USD or a -0.9 correlation. I'm curious if this had to do with central bank purchases in preparation for ECB QE , a la maybe the SNB? Since then, we've seen an accelerated move down in Gold             , which has confounded many. The explanation is rather simple: Gold             was just catching back up to the USD strength it ignored in January and February. Currently, Gold             trades at a mere 1% premium to the dollar, on a relative basis. Since the beginning of February, we've seen correlations return to normal ranges, putting in successively less negative lows and more consistently >0.8 prints. Expect Gold             to resume its highly positive correlation with the USD, which is headed higher. With a decisive break below Gold's 50% retracement on the monthly chart, expect Gold             to continue lower.
EN English
EN English (UK)
EN English (IN)
DE Deutsch
FR Français
ES Español
IT Italiano
PL Polski
TR Türkçe
RU Русский
PT Português
ID Bahasa Indonesia
MS Bahasa Melayu
TH ภาษาไทย
VI Tiếng Việt
JA 日本語
KO 한국어
ZH 简体中文
ZH 繁體中文
Home Stock Screener Forex Signal Finder Cryptocurrency Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing My Support Tickets Contact Support Ideas Published Followers Following Private Messages Chat Sign Out