Correlation Between Gold, Oil And Currency Markets Time To Buy US And Australian Dollar

Many people are now looking for the correlation of gold, oil and the currency markets such as the US dollar. These days all currencies are correlated with gold and oil prices.

Oil is the main commodity that drives the global economy. We have all seen the net effect of high oil prices and how that makes everything else much more expensive as the cost of transport increases. This then affects the currency market.

There are though four currencies that show a rather strong correlation with gold and oil. These four are known to traders as the commodity currencies.

The Four Commodity Currencies

The four commodity currencies that are strongly correlated with gold and oil are the Canadian Dollar (CAD), Australian Dollar (AUD), New Zealand Dollar (NZD) and the important Swiss Franc (CBF).  Many people think that the NZD is a hot favorites with carry traders but this is old news. The CAD is very much correlated with oil but not so much with gold. If you are looking for the top three currencies correlated with gold then you have to look to the AUD, NZD, CBF.

We all know that gold is the fall back position when the world markets are struggling. This had led to such high prices for gold in the last few years. We have always had a fascination with gold going back to Californian gold rush and beyond; as we still dig up gold treasures from ancient Egypt today.

This love of gold continues with investors today; and in a time of political and financial crisis gold is king and seen as a safe haven for investments.

The US Dollar Is “Negatively Correlated” With Gold

This has led to people moving away from the US Dollar (USD) as the “world’s currency”; people then moved towards the Euro but now people see gold as a safe shelter until there are signs of a recovery. At this moment in time the correlation of gold and the USD is what we call “negatively correlated”. We now call gold the “Antidollar”.

The markets have changed and we now have a global financial system with all the markets interlinked. It doesn’t matter what markets you trade on be it stocks, commodities, futures or forex they are all correlated and are used by traders when forecasting. This has led to gold now reaching prices that we have never seen before. This has put Australia in an enviable position.

Australia is a huge exporter of gold. This means when the gold prices are high the AUD tends to appreciate. At the same time the US Dollar gets weaker. The net result is a double impact on AUDUSD. This means it has never been a better time to trade AUDUSD.