Just some useless technical analysis stuff..

cohodk

For those with an open mind.

http://blogs.stockcharts.com/dont_ignore_this_chart/2014/01/the-euro-and-gold-dance-the-tango-in-january.html

derryb

Confirms gold's inverse relationship with the dollar index considering that the euro also has the same inverse relationship with the dollar index. Given these relationships gold tends to follow the euro in price swings. I believe the strengthening of other dollar index components as well as the dollar itself, due to the current emerging market currency crisis, may be a turning point in the inverse relationship between gold and the dollar. Having them all three move in tandem remains to be seen. It is also possible that currencies benefitting from the EM crisis may see their central banks take the necessary steps to knock them back down as the race to the bottom for currencies is far from over. A strong currency is not a good thing when trying to create jobs or export home-made products. The EM crisis may result in a shift in gold to western currency relationships.

It is ironic that western "monetary stimulus" is finally taking it's toll on emerging markets with the results threatening the very same western central banks' efforts to keep their respective currency weak. Remains to be seen how these central banks will address this unintended consequence. More QE? Harder effort to weaken the "home" currency?

cohodk

The author is concerned of a possible breakdown in the Euro and the possibility of the correlation continuing thus taking gold lower. He is also looking at a resistance area of the dollar being broken to the upside.

As far a emerging markets currencies being so weak, perhaps they had been way overbought to begin with? I kinda remember someone on these boards a few years ago being very cautious of emerging markets and their currencies. He also called the currencies of Canada and Austalia "rock based currencies" and commented on the inherent dangers of such currencies. The Canadian dollar is at a 4 year low and the Aussie dollar at a 3 1/2 year low, after losing 17% of its value vs the US dollar in the past year.