Before we detail the relationship between the comdolls and gold, let’s first note that the U.S. dollar and gold don’t quite mesh very well.
Usually, when the dollar moves up, the gold falls and vice-versa.
The traditional logic here is that during times of economic unrest, investors tend to dump the greenback in favor of gold.
Unlike other assets, gold maintains its intrinsic value or rather, its natural shine!
Gold and AUD/USD
Nowadays, the inverse relationship between the Greenback and gold still remains although the dynamics behind it have somewhat changed.
Because of the dollar’s safe-haven appeal, whenever there is economic trouble in the U.S. or across the globe, investors more often than not run back to the Greenback.
The reverse happens when there are signs of growth.
Take a look at this awesome chart:
Currently, Australia is the third biggest gold-digger… we mean, gold producer in the world, sailing out about $5 billion worth of the yellow treasure every year!
Gold has a positive correlation with AUD/USD.
When gold goes up, AUD/USD tends to go up. When gold goes down, AUD/USD tends to go down.
Historically, AUD/USD has had a whopping 80% correlation to the price of gold!
Not convinced? Check out tomorrow’s post.
