Gold and the Dollar (and the Euro, Pound, and Yen)
Usually, gold and the Dollar are negatively related; when the Dollar price of gold increases, the Dollar depreciates against other currencies. This is intuitively puzzling because it seems to suggest that gold prices are associated with appreciation in other currencies. Why should the Dollar be different? We show here that there is actually no puzzle. The price of gold can be associated with currency depreciation in every country. The Dollar price of gold can be related to Dollar depreciation and the Euro (Pound, Yen) price of gold can be related to Euro (Pound, Yen) depreciation. Indeed, this is usually the case empirically.
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References listed on IDEAS
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- Sjaastad, Larry A. & Scacciavillani, Fabio, 1996.
"The price of gold and the exchange rate,"
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