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Relationship between $ and commodities

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Sugar_Snap
Frequent Contributor
What is the relationship between these two ? It seems that crude oil follows the $ up and down, but what about gold & plat?
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6 REPLIES 6
Vano
Regular Contributor
Gold usually has an inverse relationship with USD, i.e. gold price goes up, dollar goes down. This relationship seems to have broken down in the last few months, both have been going up. With the americans printing dollars to rival the zimbabweans, one would expect the dollar gold price to be much higher than it is....
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At the moment, though, both the gold price and the $ strengthen together (when the markets go down). This is because both gold and the $ are seen as safe-havens. This is the opposite of what normally happens, i.e. that gold normally strengthens when the $ weakens.
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Sugar_Snap
Frequent Contributor
Thx Vano, I thought that I was going crazy. That is how I see it as well, but these days the market is going somewhere, but nobody knows where.
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Sugar_Snap
Frequent Contributor
Thx Timato, no wonder I am having difficutly in reading the ups and downs of the gold shares. They all seem quite high and stay high.
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SimonPB
Valued Contributor
is this a statistical relationship .. or a generally held theory that may or may not be correct ?? I ask because the book I am currently reading play directly on this ..
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Not applicable
Just a theory... Certainly, in the past few months, the correlation has been positive, which violates the theory. One can probably select a timeframe (e.g. mid-2000's) in which negative correlation is apparent. One must, I guess, attempt to understand the reasons for positive or negative correlation, in order to know when the observed correlation will break down.
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