The relationships between the US Dollar, Gold, the Stock Market, and Bonds is a complex, inter-related one that changes over time. However, there are noticeable trends and "push/pulls" that one can spot in a price performance chart.
Take a look at this following chart of the PowerShares US Dollar Index (NYSEARCA:UUP) and the SPDR Gold Trust (NYSEARCA:GLD):
What you can see clearly here is that the down move in the Dollar that began in late-2008 was in tandem with a big rise in Gold. The Gold move peaked in early December of last year. Since that time, the Dollar (represented by the UUP) has been on a steady uptrend versus its basket of world currencies (Euro, Yen, Pound, Canadian Dollar, Krona, Franc). Meanwhile, GLD is heading lower.
The simple conclusion I draw from this chart is that continued strength in the UUP/Dollar will lead to further downside in GLD/Gold. The relationship between the US Stock Market and the Dollar is not as strong currently in my analysis.
You may well think that the Dollar will eventually resume its downward slide, and Gold will have another big upleg. But "don't fight the tape" as Jesse Livermore would say -- and currently the UUP is showing strong technicals.
Interested in ETFs? Your Private Invitation to our ETF Secrets
Disclosure: No positions.