Correlation between the European currency and gold | 07 January 2022

07 January 2022, EUR/USD

EURUSD trading plan:

Gold prices slid to a two-week low, pressured by rallying U.S. Treasury yields after the Federal Reserve signaled quicker increases to interest rates. If the movement in Treasury yields goes a lot higher in the short term, that is going to be very disruptive for gold trade. Gold, a non-interest-paying asset, tends to fall out of favor among investors when interest rates increase. Benchmark 10-year yields rose to their highest level since March last year. This is a negative signal for the European currency, since the euro correlates with gold.

Investment idea: sell 1.1331 and take profit 1.1269.

David Johnson
Analyst of «FreshForex» company
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