Trading Gold and the Australian Dollar

Generally speaking, when gold prices rise, the Australian dollar appreciates as well. The proximity of New Zealand to Australia makes Australia a preferred destination for exporting New Zealand goods. Therefore, the health of New Zealand's economy is closely tied to the health of the Australian economy, which explains why the NZD/USD and the AUD/USD have had a 96% positive correlation over the past three years (2003-2005). Interestingly enough, the NZD/USD actually has an even stronger correlation with gold than the AUD/USD does - the correlation has been 90% over the past three years.