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Correlation between the European currency and gold

Correlation between the European currency and gold | 18 October 2021

18 October 2021, EUR/USD

Correlation between the European currency and gold

EURUSD trading plan:

Gold prices fell as a rebound in U.S. bond yields and a surprise increase in September retail sales dented bullion’s safe-haven status. Raising gold’s opportunity cost, U.S. benchmark 10-year Treasury yields recovered from a more than one-week low. The most Fed policymakers agree the central bank could start reducing its monthly bond purchases as soon as next month. Reduced stimulus and interest rate hikes push government bond yields up, raising the opportunity cost of holding non-yielding bullion. This is a negative signal for gold and the European currency because assets correlate with each other.

Investment idea: sell 1.1600 and take profit 1.1555.

David Johnson
Analyst of «FreshForex» company
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