Dollar Down, Gold Down; That Can't Be Right
Gold is lower along with thedollar, which leaves many scratching their heads thinking that can't be right.Correlations with different asset classes are not guaranteed to work day today. Eventually correlated assets will resume their relationships over a longperiod of time, but not necessarily day to day
Market expectations are the sameas assumptions of what the future will bring. Look at JP Morgan, which hadearnings on Friday. Expectations were that earnings would be good; they were,and the stock tanked. That should be no surprise because the good news wasalready priced in and the news didn't beat the expectations. Theyunderperformed based on what was expected.
Dollar-denominated gold will notalways react immediately to the movement in the dollar. There are other factorsin the short run that affect the price of assets. Over the long run, therelationship will come into line and the markets are always right. The dollarand gold are both in congestion and the day-to-day movement is meaninglessuntil they break out of this pattern.
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