1st chart (yellow background) = usual USD price of Gold- 2nd chart (lime green b/g) = Gold priced in GBP
- Clearly very different chart structures.
- XAU/USD is whippy (lots of zig zags and overlaps). Hard to hang on to any position, especially thru'out 2008 and triangle of earlier part of this year. High volatility due to its risk appetite proxy role.
- XAU/GBP is a lot trendier and easier to trade. Moves are much smoother and a lot more representative of real underlying gold demand.
- Hence my preference to position in XAU/GBP. Chart looks like on the rise now.
15 September 2009
Gold : A Different Perspective
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4 comments:
could you elaborate a little bit more on how Gold priced in Pounds represents underlying demand better?
Sorry, I said that badly and inaccurately. What I meant to say was that crossing out XAU and GBP takes out the noise generated by the Risk proxy ie the USD = funding currency.
So XAU/GBP exhibits cleaner trend when there is a real Gold story going on.
Thank you for clarifying, you definitely make an interesting point. The trend certainly is much smoother in terms of GBP.
I guess if your style requires a smoother trend in conjunction with more response simple moving averages or exponential moving averages this could be useful.
The thing I like about XAU/USD, based of your given charts, is that it exhibits bullish pattern confirmation with the high highs and higher lows established. This in conjunction with longer term simple moving averages is just as useful for my own style. But seeing the XAU/GBP picture helps confirm things.
I haven't studied longer term charts on gold, but based off golds recent price behavior I find that XAU/USD is just fine to analyze. Though, I definitely appreciate a different take on gold; I know some of my friends would find XAU/GBP more useful than me.
Keep up the good work!
Agree with what you say about higher highs and higher lows = uptrend. Also there is the triangle breakout on vs USD that makes it a compelling technical trade.
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