How gold affects currencies

At the Forex market impact virtually all aspects of the financial and political life of our Land. And one of the most important factors affecting the value of a currency is a commodity market. It contains millions of positions, but traders often work with precious metals and with gold. The maximum effect on currency quotes trading platform metatrader 4 has the price of gold. Primarily depend on commodity currency countries like Canada, New Zealand, Australia, and Switzerland.

The us dollar

The United States ranked second in the world in production of gold. However, despite this figure, the rising cost of noble metal leads to a depreciation of the dollar. This paradoxical reaction is obtained in connection with a particular attitude of the participants of the world financial market Forex to precious metals, which are considered a “safe haven” during the crisis and are not just the equivalent of money, but also goods whose quantity is limited.

The Australian and Canadian dollar

As the demand for gold is satisfied by the currency of its producers, in moments of high excitement rising price of the Australian and Canadian dollars. Therefore, the currency pair canadian and Australian dollar relative to the U.S. must have a strong enough potential for growth. The correlation of prices in the currencies of the two countries is in the range of 0.8 and is closely intertwined among themselves. But, in addition, that both the dollar move in the same direction, they retain the same and with the same precious metal, like gold.

Swiss franc

A close relationship with gold is observed in the Swiss franc. However, the reasons for the positive correlation of the currency with gold manifest in other signs. Despite the fact that this country has large deposits of gold ore, the Swiss franc is partially tied to gold. Therefore, in periods when the market starts a strong volatility and demand for the currency grows.

The canadian Dollar and black gold

Oil prices also have great impact on the currency quotes. Importantly, they concern not only investors, but also the whole world, including producers and consumers. In this regard, the dependence of prices on the currency of the price of oil of various brands is more complex and does not have the same stability as in the case of gold. The canadian dollar is among the currencies, is very much dependent on oil. This country produces a much more natural fuel material than it can itself consume. Therefore, the main financial business is the export of oil. In the case of “black gold” falling demand and sharply reduced the cost and the canadian dollar. Traders in the Forex market, respectively, must also follow this principle, given the size of the positive correlation to the U.S. dollar of $ 0.4.