The anti-dollar
This post is to point out a relationship with gold and the dollar that a number of people have contacted me about over the last few months. It sometimes pays to spell out the obvious as the obvious is well, not always as obvious as we might think.Gold is an anti-dollar commodity.
Look at the chart below of the spot gold price and the dollar index over the last few months
A rising dollar weakens gold and a falling dollar strengthens gold. Now during the COVID-19 crisis the USD has been operating like a safe haven currency and gaining strength during risk off sessions. Take a look at the chart below of the S&P500 (candlesticks) and the DXY (yellow line) and you can see the relationship.
Gold is a risk on asset right now. Stimulus, reflation, vaccine optimism all will help gold to the upside. So, consider gold as a 'risk on commodity'. In expectations of good times expect gold gains.