It is not a novel piece of news to most traders that the US dollar is directly linked to the value of gold in the US, and vice versa. Such knowledge has been vital to the effectiveness of traders in being able to tell which direction the currency may surge in. This is something that needs to be kept in mind where the commodity is concerned, and ultimately it will serve the best interests of those traders who know how to utilize it. So taking the time to have a good look at what is going on will be thankful later on when the value of gold takes off and they have short sold the US dollar. Currently the value of gold in terms of US dollars is at the higher end of the spectrum, but in time there should be a bounce.
The commodities market is like every other in terms of technical indicators, sometimes they work and sometimes they do not, but among the most reliable of these indicators are support and resistance levels. Recent surges in the price of gold have made investors very conscious of what has been going on with the value of the USD, and this has prompted many people to seek out other avenues of investment. This is an investment vehicle that has been more or less neutered by the US government as of late via a maximum allowable leverage of 1:1, but there is still the opportunity for an edge. The simple rise and fall in the value of this commodity is tied directly to both the currency and equities world, making for some inter-market analysis.
It must be said that while gold is a great indicator it is not a guarantee, and anyone trading should still pay attention to their Forex charts for the best chance of success. While gold is a great guiding light there are definitely a lot of other factors that need to be taken into account, a wise trader will use inter-market data in conjunction with all of their other tools. So take the time to look at where Gold is and where it may be headed, and this will have an inverse impact on the value of the dollar. Over time this should help to catch some of the larger moves of the value of the currency depending on how things shape up, so be on the lookout.
The author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to stay up to date with the latest forex quotes.