Gold’s Relationship with Major Currencies: AUD/USD and USD/CHF
Before diving into how gold connects with the so-called comdolls (commodity-linked currencies), it’s important to understand its relationship with the U.S. dollar.
Gold and the U.S. Dollar
Gold and the U.S. dollar often move in opposite directions. When the dollar strengthens, gold prices typically fall—and when the dollar weakens, gold tends to rise.
Why? Traditionally, during times of economic uncertainty, investors would move out of the dollar and into gold as a safe-haven asset. Unlike fiat currencies, gold retains its intrinsic value—it doesn't rely on a central bank or government to maintain its worth.
However, this dynamic has evolved. In recent years, the dollar has also gained safe-haven status. So, during global crises, both gold and the dollar can attract investors, though they still often move inversely over time.
Gold and AUD/USD: A Positive Correlation
Let’s talk Australia.
Australia is one of the world’s largest gold producers—ranking third globally and exporting around $5 billion worth of gold each year. Because of this, the Australian dollar (AUD) tends to move in the same direction as gold prices.
Key Point:
AUD/USD has historically shown a strong positive correlation with gold—around 80%.
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When gold rises, AUD/USD often moves higher.
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When gold falls, AUD/USD usually declines too.
This means that gold prices can be a useful indicator for anticipating potential moves in the AUD/USD currency pair.
Gold and USD/CHF: A Negative Correlation
Now, let’s cross over to Switzerland.
The Swiss franc (CHF) is also closely tied to gold—though for different reasons. Switzerland has long held significant gold reserves, and more than 25% of its currency was once backed by gold.
Key Point:
USD/CHF tends to move inversely to the price of gold.
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When gold rises, USD/CHF typically falls.
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When gold drops, USD/CHF often climbs.
This negative correlation reflects both Switzerland’s historical link to gold and the safe-haven status of the franc itself.
Final Note
These correlations—gold with AUD/USD and USD/CHF—can offer valuable clues for forex traders. But remember: no correlation is permanent. Market dynamics, global events, and central bank policies can shift these relationships over time.
And this is just the beginning—we’ve got plenty more currency relationships to explore. Keep reading!