Two weeks ago, I drew your attention to a very close interaction between gold and the Swiss franc.
Gold and the Swiss franc
If in the coming days USDCHF will start to grow, and I expect the USDCHF can come in the next few months at least in the area of 0.91, this should have a negative impact on gold.
In general, the further weakening of the inevitable process of CHF, and the weighted average rate of CHF very overvalued, will lead to additional inflow of USD-assets and may give rise to a new cycle of growth of the American stock indexes and risk purchase. This is due to lower inflation poses a threat to gold.
As never clearly a correlation between the franc and gold revealed last week.
USDCHF reached the area of 0.91 much sooner than I expected. Think USDCHF able to continue to grow if the risk is successful.
Couple EUROCHF already reached 1.05, and it should be noted that the process of weakening the franc against the EURO, even in spite of the difference in interest rates may not be as intense. At the SNB (Swiss National Bank) in foreign reserves a lot of EURO and it will not save them.
ZURICH on 30 January. (Dow Jones). The Swiss National Bank said that the euro's share in its reserves at the end of December rose. As a result, the total value of foreign exchange reserves exceeded 500 billion Swiss francs (US $ 539.1).
The volume of reserves in euros at the end of the year rose to 236.4 billion francs from 210.3 billion francs at the end of the third quarter. This is indicated by the data of the Swiss National Bank, published on Friday.
Central bank reserves in US dollars increased in late December to 147.2 billion francs from 136.1 billion francs.
The total volume of foreign exchange reserves of the Swiss National Bank, which has its headquarters in Zurich, at the end of last year reached 510.1 billion francs against 471.5 billion francs at the end of September.
The share of the euro in the foreign exchange reserves of the Swiss National Bank increased to 46% compared to 45% previously, while the share of dollars remained unchanged, amounting to 29%.
Swiss National Bank reserves in government bonds remained unchanged, at 73%, while the assets in equities fell to 15% from 16%.
Swiss National Bank reserves in other currencies, including the Australian dollar, Swedish krona, the Danish krone, the Singapore dollar and South Korean won rose to 7% from 6%. In the foreign exchange reserves of other currencies were not added.
In the long term, the process flow of CHF in dollars and euros should continue, but the process will be controlled by SNB.
See the following long-term goals: on USDCHF - parity on EUROCHF - 1,10.
EUROCHF target will be realized only in the case of rising interest rates (bond yields) in the eurozone.
But the path to these goals can be long and arduous.
Gold in the forecast this year may be reduced in the area of $ 1,000.
Author: Nicholas Ludanov
Fundamental analysis of the currency market Forex4you