This week is slated to be a down week for Gold and the Euro, according to the sentiment discounting indicator. Both $FXE and $GLD are trading at a premium, and there's enough reason to believe that these two financial instruments have had enough of a rallying cry for the past couple weeks. Expect some steam to come off both for the week ending January 19.
In one of the previous articles, there was a correlation matrix showing how much of a correlation Gold has with the Japanese Yen, soon after the posting, there was a big move for the Japanese Yen against the US Dollar. There's two thing that are remarkable about this correlation. First, the U.S. Dollar has seen a surprising amount of weakness, due in large part to the QE in reverse. This rollback in quantitative easing effectively makes the U.S. Dollar weak by increasing the reserves, inching up interest rates, while lowering the quantity supplied of currency. I suppose this trickling down in the value of the USD will continue until interest rates are raised.
Secondly, with regard to the relationships of the Japanese Yen, the U.S. Dollar, and gold, there's a great amount of interest for the Pacific Rim in general to acquire gold, …
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