Correlation of gold with oil and dollar

For about a century, leading analysts have been monitoring the clear relationship between the price of gold and the rates of most world currencies and the price of some assets, among which oil comes first.

That is, one of the guidelines when forecasting exchange rates for the world's leading currencies and futures can be such a precious metal as gold.

The correlation is easily identified if you simultaneously open several charts of assets necessary for comparison, and the following parameters should be observed:

• Time frame - on all charts should be the same, for example, one day or D1.

• The correlation can be either direct or inverse, in the first case the price of gold falls, and with it the price of the asset being compared, in the second, on the contrary, the price of gold falls, and the price of the second asset rises.

This also applies to price increases. • Delay - it is not at all necessary that the two analyzed graphs will be almost mirror images; in some cases there is a delay of a day, a week or even a month.

The connection between the price of gold and the exchange rate of the US dollar and the cost of oil is strongest, so it is easiest to consider the correlation using this example.

At almost any historical period, you will notice the following patterns:

• Gold is growing - the price of oil is also rising, while the US dollar is becoming cheaper.

• Gold becomes cheaper - the price of oil falls, and the dollar strengthens its position.

From the above, the merged situation becomes clear: not long ago, gold entered the overbought zone and a gradual decline in price began, followed by a decline in the price of oil, which accelerated due to the bearish play of the main market participants.

It is clear that in this situation the American dollar has also strengthened significantly, the rate of which has been steadily growing for six months in relation to other quoted currencies .

At the moment, only artificial intervention in the process can reverse the trend of a further decline in prices for gold and oil on stock exchanges.