Saturday, September 6, 2014

European Central Bank Cuts Interest Rates But Gold Does Not Fall

The general rule is that gold is negatively correlated with the U.S. dollar. If dollar goes up, gold goes down. And vice versa.
On September 4, the European Central Bank cut interest rates very aggresively. After that the U.S. dollar strengthened by nearly 1% - quite a nice and quick jump. After one day it stays at these high levels.
Shortly after the rates were cut gold dipped around 1%. Till that moment it was as the general rule said. But then...well, it regained nearly everything it lost and at the end of September 5, gold is standing more or less at the level it was standing before the rates were cut. Quite embarrassing, eh? Look at the charts below:

I do not know what will happen next. Gold is not in its upward trend. But it looks like the players want to tell: "Hey, we do not trust currencies, we trust gold".

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