Gold's Hidden Strength, As Revealed In Othe Currencies

That strength has ebbed recently, but it has been evident in Euros and pounds. The reason why, according to a Reuters report webbed by the Economic Times, is because sovereign risk is influencing the gold market. The huge debts that govenments have piled up are being handicapped as inflationary. Therein is an interesting fact about gold's corrlation with the U.S. dollar:

Usually the euro's decline versus the dollar would drag gold lower, but that relationship has weakened.

Using 1 as a perfect correlation and -1 as an inverse correlation, the traditionally strong link between gold and the euro-dollar exchange rate fell from 0.9 in early February to as low as -0.2 a month later, according to Reuters data.

The article also quotes a few gold bulls to the effect that currencies are locked into a race to the bottom.