ภาษาไทย
Tiếng Việt
XAUUSD and DXY correlation is back! One of the top tips when it comes to trading Gold (XAUUSD) is to watch the correlation between the two assets. But it is important to note that correlations can change so keeping up with what markets are correlating is very important.
Since March 2023 and June 2024 the correlation between the USD Index (DXY) and GOLD (XAUUSD) has been very weak. A number of factors could contribute to this, fiscal policy changes and global situations have played a big part in two assets veering off course.
Typically retail investors will look to the DXY for confirmation signals on GOLD but for over a year the correlation between the two has been poor. At one point we had them moving in the same direction, which many would think is very unusual since the price of Gold is pegged to the USD.
However, the good news for retail traders is the correlation is back. Since the 17th June the price of Gold has rallied and the DXY has fallen as many would expect. This correlation does prompt some thoughts especially when you turn to the Commitment of Trader reports.
We have seen from the GOLD report that hedge funds long contracts have surpassed the highs they made in March 2022. This is where we saw a significant turning point in Gold prices which fell over $400 in a period of 7 months. When hedge funds get aggressive it can signal a top in a market even if it’s only for a short period of time. We also have to mention the commercials or the businesses in this situation. They are not yet shorting Gold as aggressively as March 2022, which makes me believe the ‘top’ we could witness in the market will be a short term correction.
Pointing our focus to the USD where we have seen significant weakness. A slowing US economy has prompted the Federal Reserve to cut interest rates which the market has been pricing in for some time. We could be in a period of sell the rumour buy the news, now the cuts have come and are coming it could see investors take profits off the table influencing some USD upside.
With the correlation we could speculate a short term rally for the USD and a decline in Gold prices, if technical factors begin to change for both.
The 4hr chart shows the price remaining within an upward trend, in order for us to begin to look for shorting ideas, we need to wait and exercise patience. A break of the lows or a break of $2600.00 is needed in order to confirm the short term trading opportunity to the downside.
Enjoy low spreads and quick trade executions with a live account. Our highly committed customer support team will assist you with your quick account setup for any future concerns. Start trading with Blueberry.
About The Author
