A Peek at Gold, Oil, and the Dollar

Mar 14, 2008: 9:15 AM CST

Without getting too deep in explanation, let’s look at the technical picture of Gold, Oil, and the US Dollar Index on the daily charts:

First, the plunging US Dollar Index:

On to Light Crude Oil (one barrel):

Finally, Gold Contract Prices (one ounce):

Finally, let’s compare the relative performance of these markets (from 180 days ago until today):

There is a classic inverse relationship between the US Dollar Index and (most) commodities.

Recall that gold is a protection against inflation, and oil is quoted in US Dollars, so that when the dollar weakens, oil prices are inflated.

Notice also the almost mirror image of the US Dollar and the Crude Oil chart, down to the divergences and consolidation rectangle pattern. It’s quite amazing.

4 Comments

4 Responses to “A Peek at Gold, Oil, and the Dollar”

  1. anatrader Says:

    Corey

    Thank you for showing the correlations of the twin evils of Gold and Crude and the inverse relationship with USD.

    I have been able to trade quite well with the twin evils lately.

  2. Corey Rosenbloom Says:

    Ana,

    I love it! I’ve never classified these as the ‘twin evils’ but it’s a new thought!

    This has been a relatively predictable and stable relationship and likely will be for some time into the future. Congrats on being profitable through trading them!

  3. Anatrader Says:

    Corey

    You may like to see this CNBC Cashflow video of Ray Q&A on gold etc at

    http://www.cnbc.com/id/15839263/site/14081545/?tabid=15839801&tabheader=false

  4. Corey Rosenbloom Says:

    Ana,

    I love it! I've never classified these as the 'twin evils' but it's a new thought!

    This has been a relatively predictable and stable relationship and likely will be for some time into the future. Congrats on being profitable through trading them!