So far in 2009, gold and the US Dollar have both shot higher in tandem. Why...? "A STRONGER DOLLAR typically weighs on gold, sense the US went off the Gold standard they have in essence become competing currencies. But that's not what's been happening so far in 2009. Not by a long stretch. The US Dollar has gained 6.0% against the rest of the world's major currencies since the end of December. Gold has meantime gained 7.5% vs. the Dollar. So versus the Dollar's No.1 paper-currency challenger – the Euro – gold just put in its best month-on-month since fall of 1999...up more than 13% inside 21 sessions. As weak US data becomes the norm Month Over Month with the continued decline in the labor market and diminishing retail sales, traders become less and less concerned as dollar denominated assets level off the concern over quantitative easing by the FED and Hyper Inflation become more of a reality. 1. I am looking to Sell EUR/USD, AUD, NZD and the DOW. Also looking to sell EUR/CHF 2. Looking to buy GBP, Yen and Gold."going forward negative fundamentals are likely to continue out of the global economy for some time. But surely "Bullion typically moves in the opposite direction to the US currency," as Bloomberg keeps saying...time and time again. After all, gold is priced in Dollars. So Dollar up, gold down. No? Well, a perfect correlation between two prices – as judged by number-crunching data jockeys – will stand at 1.0 or near as can be set. If they display an absolute non-correlation, in contrast, then the number spat out by the PhDs' spread-sheets will read 0.0. And during the 20 years between 1982 and 2002, the average correlation linking weekly gains in the Gold Price to weekly falls in the US Dollar (and vice versa) and its trade-weighted exchange-rate index ran to just 0.31 – only a little better than hardly-worth-noting.
Trade smarter not harder.