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GoldChild · 09-05-2003, 17:48

Hi

I'm totally new to forex have not yet traded. I only became interested when I noticed something recently (May 8th)

I have recently bought into gold (vs $) was very pleased with its 2% rise.

According to Reuters this was explained by the Dollar's weakness yet when I looked at daily charts on http://www.goldstock.co.uk I was surprised to notice that even though the Euro had gained ~1.3% against the Dollar the graph of gold in Euros was near identical to that in Dollars both up by ~2%.

It was only this that made me finally work out some numbers for this triangle of currencies in the way I've briefly thought about whenever I've thought of forex markets.

At the open gold was 297Eu/oz or $341 1 Euro was ~1.13 Dollars. So to buy $341 of gold (1oz) you needed 301.77 Euros. That's 4.77 Euros more than the Euro price.

At the close gold was 302.92Eu/oz or $347 1 Euro was ~1.4665 Dollars. So to buy $347 of gold (1oz) would cost 302.62 Euros. Now really close to the Euro price.

It was only after noticing this close match that I thought that maybe I could have used the discrepency in gold prices to predict the almost exact shift in the the euro/dollar made money there too.

My questions are:
Does this happen often? (A rate change almost exactly correcting for a price discrepency) or was it a coincidence that I'm making too much of because it was the first time I've looked at forex (beginner's luck)?
If so is this a useful trading tactic? (How reliable an indicator?)
How/why did the gold prices get so out of sync in the first place? (How likely is the opportunity to reoccur?)
Is there a better reference for comparing the major currencies?

09-05-2003, 17:48	#1
GoldChild level 1 Join Date: May 2003 Posts: 29 Downloads: 0 Uploads: 0 Rep Power: 0	Is gold a good neutral indicator? Hi I'm totally new to forex have not yet traded. I only became interested when I noticed something recently (May 8th) I have recently bought into gold (vs $) was very pleased with its 2% rise. According to Reuters this was explained by the Dollar's weakness yet when I looked at daily charts on http://www.goldstock.co.uk I was surprised to notice that even though the Euro had gained ~1.3% against the Dollar the graph of gold in Euros was near identical to that in Dollars both up by ~2%. It was only this that made me finally work out some numbers for this triangle of currencies in the way I've briefly thought about whenever I've thought of forex markets. At the open gold was 297Eu/oz or $341 1 Euro was ~1.13 Dollars. So to buy $341 of gold (1oz) you needed 301.77 Euros. That's 4.77 Euros more than the Euro price. At the close gold was 302.92Eu/oz or $347 1 Euro was ~1.4665 Dollars. So to buy $347 of gold (1oz) would cost 302.62 Euros. Now really close to the Euro price. It was only after noticing this close match that I thought that maybe I could have used the discrepency in gold prices to predict the almost exact shift in the the euro/dollar made money there too. My questions are: Does this happen often? (A rate change almost exactly correcting for a price discrepency) or was it a coincidence that I'm making too much of because it was the first time I've looked at forex (beginner's luck)? If so is this a useful trading tactic? (How reliable an indicator?) How/why did the gold prices get so out of sync in the first place? (How likely is the opportunity to reoccur?) Is there a better reference for comparing the major currencies?