Gold is to Switzerland, what wine is to the French. Most of the world’s gold is refined in Switzerland and gold accounts for around 20% of Swiss exports. This close relationship to gold means that the CHF moves quite closely with gold. See the chart below.

USDEUR

The USD

The canny among you will also know that the USD has a strong influence on gold, so it is no surprise to see that USDCHF as a pair is very closely tied to gold. If the USD is strong, that weakens gold and weakens the CHF. If the USD is weak, that strengthens gold and the CHF. Here is an inverted chart of the USDCHF and spot gold to show that tight relationship.

USDCHF

Gold, and a CHF basket with greater USD weighting

So, when you add a CHF basket with a greater weighting of the USD you then can see how closely this relationship between gold and the CHF is.

Gold

So, what’s the point of all this?

The CHF sometimes moves independently of the JPY on risk-off and risk-on days. So, by knowing CHF’s relationship to gold you can choose whether to be pairing another currency with the JPY or the CHF. It will give you an edge. You will also spot why the CHF and the JPY are not moving in tandem if/when the risk tone dictates they ought to be.


Learn more about HYCM

High Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD jumps to three-week highs near 1.1650 amid falling dollar, yields

EUR/USD is trading close to 1.1650, recovering ground to clinch three-week highs. The pair cheers risk-on mood-led decline in the US dollar. Treasury yields pullback, as poor US industrial data tempers hawkish Fed’s expectations. Focus on ECB and Fedspeak.

EUR/USD News

GBP/USD: Upside needs validation above the descending trendline near 1.3780

GBP/USD edges higher on Tuesday in the Asian trading hours. The pair faces strong resistance near the 1.3770-1.3780 zone below the bearish slopping line. MACD signals upside momentum with the underlying bullish sentiment.

GBP/USD News

Gold eyes $1,780 amid recent USD weakness

Gold prices lock in some fresh gains above $1,770 amid a recent pullback in the greenback. The US benchmark Treasury yields trade lower at 1.57% with 0.57% losses, which weigh on the greenback.  A lower USD valuation enhances the appeal of the precious metal for the other currencies holders. 

Gold News

Litecoin on the cusp of 26% breakout

Litecoin price is on the penultimate leg of a technical formation that will catalyze a quick bull rally. LTC needs to clear one critical hurdle to kick-start a run-up to levels last seen more than a month ago. Litecoin price has been on a slow but steady uptrend since Oct 13.

Read more

Netflix Stock Price and Forecast: When are NFLX earnings?

Netflix stock falls nearly 1% on Friday ahead of earnings. NFLX releases earnings on Tuesday, October 19, after the close. Netflix stock has been boosted by the success of Squid Game.

Read more

Majors

Cryptocurrencies

Signatures