Gold and AUD/USD
The negative link between the US dollar and gold persists today, though the mechanics have shifted slightly.
Because of the dollar’s safe-haven appeal, whenever there is economic turmoil in the United States or throughout the world, investors frequently return to the Greenback.
When there are indicators of growth, the opposite occurs.
Take a look at this fantastic graph:
Australia is currently the world’s third-largest gold producer, exporting approximately $5 billion in yellow treasure each year!
Gold has a favorable relationship with the AUD/USD.
When gold rises, so does the AUD/USD. When gold falls, so does the AUD/USD.
Historically, the AUD/USD has shown an 80% correlation to gold prices!
Still not convinced? Another example:
Gold and USD/CHF
Across the seas, Switzerland’s currency, the Swiss franc, is similarly strongly linked to gold. When the dollar is used as the base currency, the USD/CHF often rises when the price of gold falls.
When the price of gold rises, the pair falls. Unlike the Australian dollar, the Swiss franc swings in tandem with gold because more than 25% of Swiss currency is backed by gold reserves.
Gold has a negative association with the USD/CHF.
When gold rises, USD/CHF falls. When gold falls, USD/CHF rises. Keep in mind that this association is not fixed in stone and may alter in the future.
The relationship between gold and major currencies is simply ONE of several things we shall discuss.
