EUR/USD and gold connection: a guide for beginners
A persistent and strategically valuable correlation exists between the EUR/USD currency pair and the price of gold. This relationship is not direct but is fundamentally driven by their shared inverse relationship with the US Dollar. As both assets are primarily denominated in USD, they often exhibit concurrent price movements.
For disciplined traders, this correlation serves as a critical analytical tool. It provides a mechanism for confirming trend strength, identifying potential market divergences, and enhancing overall risk management strategies. Understanding this dynamic is essential for interpreting broader forex and commodity market sentiment.
This analysis examines the practical application of this correlation and reviews the brokerage platforms suitable for its execution.
Correlation between EUR/USD and Gold: the simple rule
The simple rule of thumb:
Generally, there is a positive correlation between EUR/USD and Gold. This means they tend to move in the same direction. Why? Because both are effectively priced in USD.
- When the US Dollar weakens, it takes more dollars to buy a Euro and more dollars to buy an ounce of gold. So, EUR/USD goes UP and Gold goes UP.
- When the US Dollar strengthens, it takes fewer dollars for both. So, EUR/USD goes DOWN and Gold goes DOWN.
For traders, this isn’t just a neat observation – it’s a practical tool for confirmation, risk management, and spotting major market shifts.
EUR/USD and Gold: a trading scenario
The setup: It’s a typical trading day. The US Federal Reserve has just struck a dovish tone, suggesting interest rate hikes may slow down. This typically weakens the US Dollar.
Your observation: You see EUR/USD starting to climb steadily from 1.0750 towards 1.0800. This aligns with your fundamental analysis – a weaker Dollar.
The correlation check: Instead of immediately buying EUR/USD, you glance at the Gold chart. You see that Gold is also rallying, breaking above its recent resistance of $1,950 per ounce. This is your confirmation. The move in EUR/USD is part of a broader Dollar weakness theme, not just Euro-specific strength. The correlation is holding strong, giving you greater conviction to enter a long trade on EUR/USD.
The warning signal (divergence): Now, imagine a different scenario. Geopolitical tensions flare up in the Middle East. The US Dollar is strengthening as a safe-haven currency (a common initial reaction), causing EUR/USD to fall.
However, you notice that Gold is skyrocketing. This is a critical divergence. Gold is trumping the strong Dollar because its status as the ultimate safe-haven asset is in play. This tells you that the market is in a true “risk-off” panic. Trading the short side of EUR/USD here would be dangerous, as a flight to safety can create unpredictable volatility. Instead, this divergence might signal an opportunity to trade gold’s strength directly.
Top FX and CFD brokers to trade EUR/USD and Gold
To execute these strategies, you need a broker that provides reliable execution, tight spreads (crucial for correlation strategies), and the right tools. Here’s a detailed look at some of the top platforms, moving beyond a simple table.
FP Markets
FP Markets: If you are a trader who lives and breathes charts and execution speed, FP Markets is a top contender. They are renowned for their true ECN pricing, which means you get raw, institutional-grade spreads directly from liquidity providers. This is invaluable when trading a pair like EUR/USD and Gold simultaneously, as even a small difference in spread can impact profitability on correlated moves. Their support for both MetaTrader 4/5 and cTrader makes them a favorite among algorithmic and professional traders.
Exness
Exness: For traders who employ strategies like scalping or who need high leverage, Exness stands out. They have built a massive global clientele by offering some of the highest leverage options in the industry and a unique, nearly instant withdrawal system. Their ECN accounts are known for exceptionally tight spreads, especially on major pairs like EUR/USD. This makes Exness a powerful platform for traders who want to capitalize on short-term correlated movements between the Dollar and Gold.
XTB
XTB: XTB takes a different approach by offering a truly exceptional proprietary platform: xStation 5. While it supports MetaTrader, xStation 5 is their crown jewel—sleek, intuitive, and incredibly powerful for analysis. The charting tools make it easy to overlay EUR/USD and Gold prices or to view them in separate windows to spot correlations and divergences quickly. Combined with strong regulation (like the UK’s FCA), XTB is ideal for traders who prioritize a superior trading experience and analytical depth.
XM Group
XM Group: For those beginning their trading journey or looking to deepen their knowledge, XM is arguably unbeatable. Their commitment to education is staggering, with a vast library of webinars, video tutorials, and market analysis. They offer micro and standard accounts, allowing you to trade small positions as you test your correlation-based strategies without significant risk. Their user-friendly approach makes the complex world of FX and commodities accessible.
OANDA
OANDA: A veteran in the forex world, OANDA has earned a reputation for reliability and trust. They are particularly famous for their high-quality market data and API, which is used by institutions and algorithmic traders worldwide. If your trading style is heavily based on data analysis and historical testing of correlation patterns, OANDA’s robust data feeds and tools are a significant advantage. They provide a solid, no-nonsense platform for the analytical mind.
eToro
eToro: eToro revolutionized retail trading with its CopyTrading platform. Suppose you understand the EUR/Gold correlation in theory but lack the confidence or time to execute trades yourself. In that case, eToro allows you to find and automatically copy the trades of successful investors who may already be using these principles. It’s a social network built around trading, perfect for those who prefer a community-driven approach.
Risk disclaimer: eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 61% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
This communication is intended for information and educational purposes only and should not be considered investment advice or investment recommendation. Past performance is not an indication of future results.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
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