As the old saying goes, currencies make the world go around. Well, many gold traders and investor should take note that spot gold is trading inversely to the USD/JPY. When the USD/JPY chart declines, gold's price will increase and trade higher. Traders can easily look at a chart of both the SPDR Gold Trust (GLD) and the USD/JPY to see how these two equities will trade opposite of each other.
A Big Deal
In the past, the GLD would normally trade inversely to the actual U.S. Dollar Index (DX U3), however that relationship is no longer intact, which is why it's important to watch and follow all of the different currency pairs in the marketplace. Today, the USD/JPY is trading higher by 0.88 cents to $95.64. While the move in the USD/JPY may not seem like a big deal, it is and it moves markets. Traders can easily see the decline in the GLD and most other gold-related equities. Other gold stocks that are falling today include the Market Vectors Gold Miners ETF (GDX) and the Deutsche Bank AG DB Gold Double Long ETN (DGP). If the USD/JPY pulls back or declines, that's when spot gold is likely to trade off of the lows.
Nicholas Santiago
www.InTheMoneyStocks.com