Relationship between Gold and US Dollar?

Hi Forum members,

From my understanding:


When US Economy Data Good, big order traders will:
sell usd/jpy bond (cash out $)
buy commodity currency.
buy local share mkt.
buy international share mkt.

sell gold (assuming economy good, no war etc)



When US Economy Data Bad, big order traders will:

buy usd/jpy bond (safety)
sell commodity currency
sell local share mkt.
sell international. share mkt.

buy gold (war, economy bad etc)




However, there's another saying with different story all together.

gold have inverse relatioship with USD
gold normally will moves with commodity currency

when USD goes up gold normally comes down
(this is different from my understanding of USD goes up, go should go up too)

Anyone can give some advice?

I must first say that I am not an expert but so far I know the issue is related to preserving assets whether in the form of GOLD or USD and this is their relation! If major economies of the world begins to increase their Gold reserve instead of USD, value of USD will fall and vice versa! I will also appreciate any ideas and information if anybody likes to share since I also have a fascination towards Gold...

Market sayings are just generalized speculations on some a relationship that may have existed at one time but no longer. I would use them with caution.

I take it from the above that you really want to know the correlation between gold and US Dollar. I think that you can see the current correlation, or lack thereof, by overlaying a US Dollar Chart on a Gold Chart.

Generally speaking, Gold and USD has an inverse relationship. So when USD is in demand, the demand for Gold drops and vice versa.

Right now, all the indexes and equity markets are at all time highs or near to all time highs. This is because central banks around the world are pumping in liquidity into the system hoping to resuscitate their economy. This has an effect on pumping up equity markets are investors and institutions search for higher yields by dabbling in equities.

Thus, this rise in equity markets are based on hot air, not because the respective country's economies are improving. In fact, the Eurozone has been in recession for the past 6 quarters, based on negative GDP releases. The US economy is not as healthy as what the mainstream media touted it to be. Do your due diligence and go find out about how they derive their employment numbers and unemployment rates. You will realise they massage the numbers to make the economy look better than it really is.

Anyway, as the central banks continues with their aggressive monetary policies, it will only result in higher inflation and even hyperinflation (think Japan). When that sets in, the demand for Gold and Silver will skyrocket. Read up on history and you will know it has always been the same. When the people lose faith in currency, they will flock to physical assets like Gold and Silver.

Interesting post. Yep, I agree that generally speaking there is an inverse relationship between Gold and USD. Stock market is full of hot air and money has been moving into USD to buy the stocks, just like the tech bubble from 1996 to 2001 (which also saw the strengthening of the USD). When the stock market bubble pops, so to will this recent dollar bubble and money will rush back into gold. Timing the trend reversal is the hard part.

Yes, USD and GOLD have strong inverse relationship. Also, I had noticed that there is some relationship between USD and OIL price, as OIL goes up, USD depreciates. NOTE: when US economy was on a downtrend, many Governments around the world turned their reserves from USD to GOLD pushing down even more the value of the USD

As one Econ professor used to say: Two currencies on a table, same amount of units of both. A one to one exchange. Print more of one, you automatically depreciate the value of that currency ( eg. 1:1.##+) Inflation in other words.

Comments, corrections welcome

-Coatl

Perfect negative correlation between the two elements.......

Gold chart in a clear down trend


The USDIX in a well defined uptrend


Then have a look at the DJ chart. Its all clear here