Good day forex koalas.
With the Greek deficit crisis probably causing much risk aversion now, it will be a good time to revisit the correlation between the EUR/USD and Gold.
We know that gold is priced in US Dollar and hence they probably share a generic correlation due to that. Other than this, as gold is usually an investment of choice when it comes to stormy economic weather, monitoring it may give insights to the current sentiments.
Looking at the two charts above from March 2010 till now, there is still an apparent correlation between the EUR/USD and gold.
Firstly, this is probably due to the fact that the EUR/USD consist of the US Dollar. Secondly, we can see that gold starts to climb from April 10. This was probably due to the growing concerns that the market had with regards to the Greek deficit crisis. Despite a stronger US Dollar, gold increased in value. This blends into the risk aversion theory and is probably one of the main driver of this correlation.
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