The relationship between currencies and gold goes back centuries. Throughout the ages, the relationship between those two economic factors remained closely linked. However, with much of the world embracing flat currencies, the relationship between gold and currencies has taken a modern spin.
In the last few decades, economists and investors have observed an inverse relationship between gold and currencies. For example, when the value of the U.S. dollar goes down, the value of gold tends to go up—and vice versa. This inverse relationship has allowed economists and investors to make predictions about gold or dollar values, based on valuation trends from the other.
When reading the relationship between currencies and gold, precious metals investors can capitalize on times when the value of the dollar is low. If the trend holds true—and it normally does—then an investor’s purchase of gold will increase in value in the coming days or months.
There’s a lot more to say on this subject. To learn more about the many factors that effect the gold market, read “What Causes Gold Prices to Fluctuate?”