Forex Markets: Gold and the US Dollar

Gold and the US Dollar

Since gold is priced in US Dollars, it is important to for gold investors to understand the intimate connection between these two reliable assets.  In some cases, investors will see that volatility is starting to pick up in the broader markets and this tends to create scenarios where both gold and the US Dollar can rally.  But since this is not true in all cases, it is a good idea for financial investors to have a better idea of how the main trends in both assets tend to unfold.

Both the US Dollar and the price of gold share an inversely-correlated relationship which essentially means that bullish scenarios for one asset tend to have a bearish effect on the other asset.  If you want to learn how to invest in the gold markets, you must understand that you will need to monitor the forex markets as well in order to have a better idea of where your investments are headed.

Choosing a Forex Broker

Some of the best ways of determining where the value of the US Dollar include opening a forex trading account.  One of the best choices for this is Juno Markets, which is Asia’s forex broker.  The company offers efficient trading platforms and access to market news that can be very helpful in assessing where the market is likely to move next.  Many forex brokers will enable you to trade in the value of gold as well, so this is an option to consider if you are looking to gain a more comprehensive trading plan.  

Gold trading through a forex platform is arguably one of the easiest ways of gaining exposure to the precious metals markets without taking physical ownership of the metals.  Some forex brokers will enable you to trade the value of gold against the Euro or the Dollar, but there are generally not more direct ways to play its value.  If you wanted to bet for or against the gold against the Japanese Yen (for example), you would need to take an open position in either the Euro or the Dollar and then open another position in the EUR/JPY or the USD/JPY.  This would ultimately have the same effect as a GOLD/JPY position.

Watching the US Dollar

In all, you will be looking for scenarios where the US Dollar is likely to show significant gains or losses.  When this is done, investors can enact positions in gold in the opposite direction in choosing to either buy gold or sell gold depending on the scenario.