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Relationship Between Forex Pair with Gold and Oil

Relationship between Gold and AUDUSD

Follow the AUD/USD currency pair and Gold prices, as analysts have observed an 89% correlation between both investment instruments, when all other factors are neutral.

  • When USD value decreases, demand for Gold increases

  • Higher demand for Gold favours exports and the trade balance for Australia

  • Higher exports strengthen the Australian Dollar against USD

  • As a result, the AUD value goes up along with the value of Gold

Relationship Between Gold and USDCHF:

Switzerland also has a strong interest in gold, as 25% of their currency reserves are stored in gold. Because of their gold stores, the Swiss franc increases in value. Remember, the AUD/USD pair correlates positively with gold, while the USD/CHF pair correlates negatively with gold. In both cases, the USD is getting weaker, but in the USD/CHF pair, the USD is the base currency. When the Swiss franc gains strength, the USD/CHF pair declines.

Relationship Between Oil and USDCAD:

About 45% of all U.S. Crude Oil imports come from Canada thanks to its advantageous location. Logically, USA causes huge demand for Canadian dollar (CAD) when the price of Crude Oil increases.

When Crude Oil’s value increases, go short (sell) on the USD/CAD. Historically, this correlation has been 70% accurate if all other currency affecting factors are neutral.


Relationship Between Oil and CADJPY:

While Canada is a net exporter of Crude Oil, Japan imports 99% of it. In addition, Japan is the fourth biggest consumer country of Crude Oil, because it makes up nearly 47% of all Japan’s energy resources.

When Crude Oil price increases, go long (buy) on the CAD/JPY, if all other affecting factors are neutral.

Beware that trading CAD/JPY involves higher risk as the pair generally has bigger spreads (difference between bid and ask price), because it’s traded less than the USD/CAD currency pair.

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