AUDUSD and Gold Price Correlation
■ AUDUSD has a positive correlation with Gold
■ AUDUSD has had an 80% historical correlation to the Gold Price
The Australian Dollar against the US Dollar is highly correlated to the gold price. This is due to the following reasons:
- Australia is an important gold producer (9.4% of global production in 2014)
- Australia’s gold reserves of 9,800 tonnes count 18% of global reserves
- The Gold Price is by rule negative correlated to the US Dollar
Chart: Global Gold Resources
Source: United States Geological Survey (USGS)
The Aussie and Gold Price correlation is mainly driven by domestic Australian gold production. The value of Australia's Gold exports is about 5 billion USD in an annual basis. Note that the largest gold producer in the world is China and South Africa follows. Australia is also a large exporter of uranium, coal, and some other metals.
In addition, Australia's gold reserves are the highest reserves in the world. In the second position is South Africa (6,000 tonnes) and in the third position is Russia (5,000 tonnes).
Chart: Australian Dollar vs US Dollar and Gold Price Correlation (2011-2016, Price Feed: Google Finance)
The Advantage of Going Long on AUDUSD than Buying Directly Gold
In a long-term basis, the Aussie follows similar price patterns to the gold price. Many traders prefer to go long on AUDUSD than buy directly gold contracts and there is a good reason for that. Gold is not offering any interest rate. Moreover, if you go long on a Gold contract you will be forced to pay an overnight rate (negative swap value). On the other hand, the Aussie against the US Dollar offers positive swap value, and that means it pays you an overnight rate.
Forex Brokers and AUDUSD SWAP Rates
According to ForexExperts.net research, these are some positive AUDUSD SWAP Rates (when going Long) offered by Forex Brokers:
Table: AUDUSD Overnight Swaps
Gold Correlation to Swiss Franc
The Gold price is also correlated to USDCHF, as 25% of Swiss money is backed by gold reserves.
■ Gold has a negative correlation with USDCHF
Other Australian Dollar Correlations
- During the past two decades, the correlation between copper and AUD is more than 70%
- The Aussie is also correlated to Silver and other Commodities
- The Aussie is also highly correlated to the New Zeeland Dollar (more than 90%)
■ Australian Dollar and Gold Price Correlation