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Correlation Can Signal Market Moves
Market movements are often influenced by correlations between assets, notably the inverse relationship between gold and the dollar. When the dollar experiences a significant decline, gold typically appreciates in value; however, there are instances where this correlation does not hold, referred to as a 'correlation failure.' These occurrences can serve as indicators or signals, particularly in the absence of substantial fundamental news regarding gold. By observing these correlation dynamics, traders can gain insights into potential market fluctuations.