Gold has de-linked from its typical inverse relationship to the dollar
Gold has de-linked from its typical inverse relationship to the dollar. Since early November 2014 the DXY has appreciated 8.4% while gold has appreciated 13.5%. The positive correlation of gold to the dollar is likely due to increased safe haven investment demand from increased market volatility across several asset classes, rising systemic risk, and as a hedge against the competitive devaluation between major fiat currencies. In the last two weeks we have seen the Swiss abandon their euro peg, the Canadian Central Bank surprise with a rate cut and the ECB announcement of $1.14 trillion QE. These events were followed by the anti-austerity Greek election outcome that may result in instability and possibly contagion into the Eurozone... We believe it is just a question of time before we break above the 100wma ~1,310. By failing to do it this week, a pause and decline to the 200wma ~1,250 would be a rational move. If we don't, it would confirm that the recent gold run could be the real thing that takes us to the 200wma ~1,500. Stay tuned. (VIEW LINK)
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