Gold and silver are rising notably this morning with little specific news aside from the Bafin precious metals manipulation furore. Silver bounced off $20 and is now over $20.40 and Gold is back over $1250. What is perhaps more notable is that the USD is higher once again which supports the fact that the relationship between precious metals and the US Dollar is at its weakest since October (as opposed to its more normal negatively correlated relationship). As Dean Popplewell notes, "we are seeing a short-term phenomenon of physical demand supporting gold and helping to negate the strength in the dollar," as sales of American Eagles coins in January have topped the previous month. However, the tumble in correlation on a longer-term scale suggests gold has more upside to go in the short-term.
Gold and silver bottomed at 715ET and are back nto the green on the week now...
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As the relationship between the US Dollar and Gold has dropped to its lowest in 3 months... (the higher the absolute correlation the more 'related' the two assets - with gold and USD
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But on a longer-term basis, the correlation just plunged towards the -1 extreme... which in the past has signaled a rise in gold prices in the ensuing months...
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As Bloomberg notes:
Gold is rebounding this year after the metal fell the most since 1981 in 2013 partly as the Federal Reserve signaled it would reduce monetary stimulus. Demand has picked up as lower prices attracted buyers. Deliveries by the Shanghai Gold Exchange almost doubled in 2013, and sales of American Eagle coins by the U.S. Mint so far in January topped the previous month’s purchases.