• Gold shares an inverse relationship with the US Dollar (USD) and is generally seen as a safe haven when investors become risk adverse.
• As we mentioned a few weeks ago, it has therefore seen a climb upwards on the back of global economic concerns since the start of the recession – it rose by 24% last year as the dollar fell 4.2 percent.
• If we look at Gold over the past week in the chart above we see a huge rally as jittery traders mostly turn their back on currencies.
• However, on 4 March the Gold price faltered as the USD strengthened against the Euro on speculation that the European Central Bank will not be withdrawing stimulus anytime soon.
• Some investors took this opportunity to cash in on the rise in the Gold price and buy USD.
• As the Non-Farm Payrolls announcement shows that fewer jobs where lost than expected and the USD has strengthened again today, will we see Gold drop?
• Wherever it goes next, Gold is still highly volatile and offers good opportunity for exploitative trading.