Gold,oil and forex markets are intimately connected. As a forex trader, keeping an eye on the gold and oil markets can help you forecast price changes. Gold and oil prices are considered to be leading indicators in forex trading. The three markets, gold, oil and forex tend to move based on the same fundamentals. Get this 1 Minute Forex Trading System FREE. This forex trading system is so simple that even a person who has never traded forex can use it to make money. Download these Forex Scalping Cheatsheets plus the 10X Scalping System and the Hot Time Indicator FREE. Learn this Fibonacci Retracement Method FREE that can pull 500+ pips per trade!
Now, over the centuries people have been smitten by the lure of gold. Remember the California Gold Rush of the 19th century when people went to the wilderness in California in search of gold. This same perception still continues in the minds of investors and in times of political and financial crisis, people tend to seek refuge in gold as a safe haven investment. Precisely this same phenomenon is shaping in front of our very own eyes, as people are abandoning the US Dollar (USD, the world’s reserve currency and taking shelter in gold. Gold and USD are negatively correlated. Gold is also known as Antidollar.
Globalization has changed the nature of the global financial system. Now, most of the markets are interlinked. Commodities, stocks, futures, forex all these markets have now correlations that can be used by savvy traders in forecasting. Gold prices are reaching historical highs. Australia is a big exporter of gold as large gold mines are located in its interior. So when gold prices go high, AUD also tends to appreciate. On the other hand, when gold prices increases USD gets weak (gold and USD are negatively correlated). So this produces a double impact on the pair AUDUSD. What this means is that this is the best time to trade AUDUSD!