**As seen in Macro Walk report 03/17/23, subscribe at cablefxm.co.uk/reports
The cross asset correlation section of the Macro Walk report noted gold-FX short-term coefficients breaking up from long-term relationships
This happened as gold climbed above $1950.0/oz, the move looks to test its 2020 highs. The divergence in fiat/USD and XAU/USD follows the story of financial stress and the liquidity injection, investors are looking for alternative assets to the dollar like crypto and gold
If we compare the relative performance of XAU to EUR/USD, we note that the gold out performance has sent the spread between the two to a new high (looking back 10-years).
The last time gold reached a peak was in 2020, this was followed by a spread narrowing to EUR/USD as the move was both ways, gold retraced from its highs and the euro got stronger. This development took place over months, XAU/USD reached its peak in July 2020 before retracing and shrinking its spread to EUR/USD, the differential bottomed in March 2021
Comments