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Correlation between the European currency and gold

Correlation between the European currency and gold | 09 February 2022

09 February 2022, EUR/USD

Correlation between the European currency and gold

EURUSD trading plan:

Gold prices have been stuck in range-bound trade since the beginning of the year, caught between rising inflation worries and growing expectations for Federal Reserve interest rate hikes. Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion. Higher rates also boost the dollar, pressuring the greenback-priced precious metal. If actual inflation data on Thursday issues as expected or higher, the dollar should strengthen along with U.S. Treasury yields leaving gold with substantial downside pressure. This is a negative signal for the European currency, since the euro correlates with gold.

Investment idea: sell 1.1440 and take profit 1.1385.

David Johnson
Analyst of «FreshForex» company
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