Gold update - 20081022

I have been quite busy for the past few days, and so many things are happening that it's hard to pick just one or two items and post about them... I now have had the time to pick of news pieces that nobody seems to have dealt with. The first one is the price of gold. Why is it declining?

So first of all, I already mentioned just a few days ago in Gold vs Gold (paper vs physical) pt3 that on the short term, the Great Unwind might affect negatively the price of Gold. So this could be the first place to look for an explanation.

Going further down this route, it appears that the US investors are liquidating everything they can, and most likely liquidating their foreign assets. In the light of this, we understand why the USD is rising so much and so quickly defying gravity and the fundamentals. If you also remember that Gold, is also a currency, under the ticker XAU, you will understand that the rise of the USD against every other currency means that the price of gold in dollar terms is falling. This is further confirmed by the fact that Gold didn't really move against the Euro or the Pound.

Fx charts below (can you detect similarities?):

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