Complementing FX trading With Gold

Boston, MA November 8, 2013

Historically Gold was viewed a luxury product used in the manufacture of jewelry and electronic components.  However, over the last decade Gold has become an important part of many investor portfolios.  Gold has been considered a safe haven investment in times of uncertainty (like 2008 financial crisis) and a hedge against inflation but in recent years has become an important asset class for retail and professional investors.  Traditionally Gold is traded as a futures contract but with the increasing demand Gold is also offered as a spot instrument to complement traditional margined FX.

Like other FX instruments, spot Gold has similar characteristics including low margin requirements (lower than trading on the futures market), minimum trade size from 1 ounce, tight spreads and no expiration - enabling investors to keep positions open for as long as they desire.  Like any asset class, traders are continually looking for signals or correlations to trigger a trade opportunity and Gold presents some interesting correlations.

Correlating Gold with AUD?

Gold has experienced an aggressive bull run over the last 10 years, but it has been a volatile path and is currently trading around $1300 an ounce significantly lower than its all-time high of $1900 an ounce in 2011.  Despite Gold trading lower than the high of 2011, traders are continually looking for opportunities to capitalize on Gold and discover correlations (long and short) that may exist between Gold and complementary asset classes.

Complimenting FX trading with Gold


As an example, the weekly chart above shows the historical correlation between Gold and AUD/USD over the last few years.  As the chart illustrates, by looking at AUD/USD chart and overlaying Gold, traders may be able to uncover trading opportunities in Gold or indeed vice versa!  

To take advantage of trading Gold and make it part of your trading strategy, please contact Boston Technologies on:

Email: Phone: +1 617 314 6800