What currencies cover gold positions?

[2gavig]

What currency can I use to cover a position in ORO within the forex market?

[glomiepkm]

Check this site and study the correlations well: http://www.myfxbook.com/forex-market/correlation Work with intelligence, not effort.

[PEPELUIS400]

...

[evamispkcumas]

Gold.

[2gavig]

I’ve been looking at correlations but it’s still unclear to me if any currency has a strong and consistent relationship with gold. I see that sometimes the AUD moves in the same direction, but other times it seems to go free. Does anyone really use a currency to make direct hedge against XAUUSD? Or is it better to just reduce exposure and ready?

[Aipkmlgb]

AUDUSD is the closest you will find as indirect coverage. Australia is one of the leading exporters of gold, so its currency usually has a certain correlation with the price of metal. Now, don’t get too excited. The correlation varies with time. It’s not a physical law, it’s an economic relationship subject to multiple factors.

[MIGWLAPOMLA]

Forget about looking for magic correlations. Gold has a life of its own and doesn't account for any currency. If you want to cover yourself, I learned to handle the size of your positions and put decent stops. And if you insist on covering yourself with another pair, prepare for a headache. You're going to be longer managing the hedge than you're seriously operating.

[iilsoxmmc]

It has served me to partially cover with USDCHF. It is not perfect, but when gold falls by strengthening the dollar, the Swiss franc usually moves in the opposite direction. Yes, do not expect it to be a mathematical coverage. It is more an impact cushioning strategy than an absolute shield.

[2gavig]

I understand that no correlation is perfect, but I am interested in reducing risk without closing the whole position. Perhaps a partial hedge as you say is more realistic. I do not seek to protect myself from everything, only to soften the strong falls without getting out of the gold if I still trust the general analysis.

[camlllcomuna]

In that case, take a good look at the crosses with the yen. USDJPY and XAUUSD sometimes move in opposite directions, especially when there is aversion to risk. But as you have already been told, it all depends on the context. A correlation can last weeks and then disappear without notice.

[Homacio]

The irony is that many people are looking to cover the gold without understanding what moves it. If you don’t know why it goes up or down, any coverage you make will be pure chance. First master the asset. Then think about covering it. Not the other way around.

[2gavig]

Yes, I agree. I’m studying the macro factors behind gold, such as real interest rates, inflation and global sentiment. But in the meantime, I wanted to explore practical tools. I find it a bad idea to keep an open and sitting position while the price goes against me 200 pips.

[juox82]

In that case, use options if your broker allows it. A gold put can protect you while you let the operation run. It is the cleanest coverage there is. Yes, prepare to pay the premium. Nothing is free in this business.

[Gokgoke]

You can also cover yourself with futures or reverse CFDs if your platform allows it. But look at cross-leverage, you can end up making the drawdown worse if you don’t calculate it well. Sometimes less is more. Reducing lot and waiting is more effective than getting into complex structures.

[fman82]

I am surprised that no one has mentioned oil. There are times when gold and oil go in opposite directions, especially when the dollar is the common factor. It is not a constant correlation, but if gold falls by force from the dollar, and oil remains firm by scarcity, there you have a possibility of indirect hedge.

[2gavig]

I've never thought about it from that angle. I've always seen oil as another world. But now that you say it, I feel like looking at those historical correlations. Do you have any reliable sources to see those correlation data with graphics and everything?

[Kokkipk]

Myfxbook has a pretty useful correlation panel. You can also use Investing or TradingView with custom scripts to track your own. Yes, update the data followed. A correlation from three months ago today is useless. The market is changing like the weather.

[oxxiggll]

Actually, this whole hedge thing sounds like an excuse not to take a stop loss. If you don't want to lose, don't operate. But if you do, bank the loss as an adult. The hedge is overrated. Use it if you have a diversified portfolio, not for a simple XAUUSD operation.

[2gavig]

I don’t do it to avoid the stop, I do it because sometimes the movement is technical but with background noise. It’s gone from panic right before the bounce. If I have partial coverage, I can hold the main operation with colder head. It works like this for me.

[vpinoxn]

Well, if it helps you psychologically, it's already a good reason. Trading isn't just technical, it's 90% mental. And if a coverage prevents you from sabotaging your plan, then it's worth it. Just make sure you understand what you're doing.

[jamea]

Another tip: if you're going to cover gold with a currency, do it at times of high correlation, not random. Use recent data, not assumptions. And never, ever, cover a losing operation. I covered it from the start, as part of the strategy, not as a patch when you're already in red.

[2gavig]

Good point. I think I’m getting closer to a structure that combines partial coverage and batch reduction when the price goes against. I don’t want to overcomplicate it, but I don’t want to keep improvising every time XAUUSD makes an unexpected turn.

[GawuMen]

Then you go well. Remember that the best hedge is a good entry. And if you’re not 100% convinced of the trade, you better not open it. Gold is beautiful to trade, but it’s volatile and treacherous. I learned to live with it or I chose another asset. That’s simple.