Gold and the Dollar

A question was posed to me last week, "why is the dollar and gold moving in the same direction?" Historically gold and the dollar have an inverse relationship so you could speculate that the move is rather anomolous and can't be rationalized as some paradigm shift in market principles. As expected expanding your reach beyond just a couple of days of price action doesn't yield much of a deviation from that long standing position.

I'd found that the USD bottomed around the middle of March 2008 and has continued to rise from the end of September/beginning of October while gold hit it's high in the middle of March and continues to fall.  Most recently, the dollar has lost some ground since the beginning of December but gold increased during the same time frame.

Like a number of financial securities and derivatives with similar relationships there will certainly be anomolous blips when USD and gold deviate from their historical norm but for now it's unlikely that some paradigm shift has taken place and that the dollar to gold relationship, as we know it, is intact.