Should I track gold in dollars or sterling?

Gold ETFs are denominated in different currencies. So is it best to track Gold denominated in Sterling (GBP), or better to track it based in Dollars (USD)?

I do much of my trading via a trading ISA. If I liquidate a position, the money is held in sterling until I trade again. However, USD Gold ETFs can be more liquid because the trading volume is higher.

Previously I have used a graph of Gold denominated in USD to give me a buy/sell signal. However, this does not make sense if I sell the trade and end up with sterling. Currency valuation changes will distort how a graph appears. Here is the price of gold denominated in USD. It has been flirting with the two-year moving average, with sequential sell and buy signals the last couple of weeks. The USD is quite strong (especially since the recent base rate change).

However, the GBP denominated ETF triggered a buy signal some time ago. GBP is currently quite weak, and the markets favour gold over it. Here is the graph:

It is quite clear from the graph that gold is more in favour than sterling. I shall, in the future, use a sterling denominated ETF for my gold investment decisions, even if I actually make the purchase and sale in a USD denominated ETF.

If you are interested in my view of the different asset classes and whether I want to be in or out of them at the moment, have a look at my latest video. Apologies for the video style. It was done on my iPhone, as the computer that I usually use for this has gone to the computer hospital…. (sigh).. Here's the video:



Have a great week!


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