"Do you have a graph in the library showing the gold price in a (trade weighted) basket of currencies, which I think might give one a better idea of how gold is really performing? Thanks,"

Eoin Treacy's view Thank you for this suggestion. I took the Dollar Index, Asia Dollar Index and Latin America Dollar Index as reasonably representative and created the respective charts of gold quoted in terms of them. You will now find these charts in the Relative Charts section of the Chart Library.

Gold in terms of the Dollar Index, which is predominantly Euro, Yen and Pound, remains in a consistent uptrend. It has been consolidating in the region of the 2009 high, for much of the last six months and a sustained move below 85,000 would be required to question scope for further upside over the medium term.

Gold in terms of the Asia Dollar Index hit a medium-term peak in November and found support in the region of the 2009 high from February. It is retesting this area and an upward dynamic is needed to check the short-term decline. A sustained move above 10.25 would signal that demand has regained the upper hand.

Gold in terms of the Latin America Dollar Index retested the 2009 high in November but failed to breakout and continues to range below the peak in an extension of the 13-month range. While the chart pattern has a mild short-term downward bias, a sustained move below 8.8 would be required to question the consistency of the medium-term uptrend.

While these indices give us a reasonable idea of how gold is trading in other currencies, the Australian Dollar, New Zealand Dollar and South African Rand are not covered, so it may also be instructive worth looking at charts for gold in terms of these currencies. There patterns have considerably more in common with those of the Asian and Latin America indices than the Dollar index.

The fact that gold is performing best against some of the world's weakest currencies backs up our contention that gold is encountering competition from other asset classes, particularly from countries with some of the better performing economies.


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