I compared the correlation between Euro_ Gold_ and Dollar_ on a combined chart, and tried to figure out the periods when Euro_ and Gold_ reacted inversely to DXY_ trend.
I distinguish the two factors effecting gold_prices: USD_weakness, risk appetite.
Focusing on the non-economic risks, I recall these critical events since November.2016.
- US election risk release and Trump rally
- Netherlands and France elections
- Brexit uncertainty (effective until T.May triggered Article 50)
- Comey’s testimony effect on Trump administration
- North Korean tension (excessive reaction in gold_prices)
Except US elections (after which USD_ smashed all its rivals), maybe we can say that the gold_markets bought the other risks listed and sold them back, which broke the Euro_Gold Correlation.
During other times, correlation seems quite normal, where USD weakness or strength has driven the prices of Gold_and_Euro_ in parallel.
At the final point as of now:
Gold_prices still ranging within 1250-1300, but Euro_ appreciated well compared to last quarter of 2016.
In economic terms, USD is weaker than before (FED less hawkish) and EUR is stronger supported by hawkish ECB (following long years of dovishness).
Taking all above as a deuce point, I plan to take long-term positions on (stronger USD/weaker EUR) basis, which I see more probable.
I distinguish the two factors effecting gold_prices: USD_weakness, risk appetite.
Focusing on the non-economic risks, I recall these critical events since November.2016.
- US election risk release and Trump rally
- Netherlands and France elections
- Brexit uncertainty (effective until T.May triggered Article 50)
- Comey’s testimony effect on Trump administration
- North Korean tension (excessive reaction in gold_prices)
Except US elections (after which USD_ smashed all its rivals), maybe we can say that the gold_markets bought the other risks listed and sold them back, which broke the Euro_Gold Correlation.
During other times, correlation seems quite normal, where USD weakness or strength has driven the prices of Gold_and_Euro_ in parallel.
At the final point as of now:
Gold_prices still ranging within 1250-1300, but Euro_ appreciated well compared to last quarter of 2016.
In economic terms, USD is weaker than before (FED less hawkish) and EUR is stronger supported by hawkish ECB (following long years of dovishness).
Taking all above as a deuce point, I plan to take long-term positions on (stronger USD/weaker EUR) basis, which I see more probable.