There are a number of fundamental factors at play but from a technical perspective the divergence of gold prices from the AUD/USD presents an interesting trading opportunity. In the long term and short term gold prices and the AUD are paired and tend to move in tandem. While the day to day moves are not a perfect mirror a divergence as big as the one we are seeing today is rare. Investing towards a reconciliation in favor of the market that has been moving the most (gold in this case) is a good trade.

There are a couple of ways to take advantage of this situation that I will talk about in the video. First, a trader could simply go long the AUD/USD following a breakout assuming that the AUD starts gaining in strength against a weak USD. Or, alternatively, this is an attractive opportunity for an options straddle.

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3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."