Typically, when the dollar falls - gold rises, and vice-versa. However, year to date, the correlation coefficient between gold and the dollar is +0.82 (a strong positive relationship).
The same does not hold true for the Euro, which has declined sharply this year amid sovereign debt concerns. The correlation coefficient year to date between gold and the Euro is -0.84 (a strong negative relationship).
When all three are overlaid on a chart, it is easy to see that the Euro and Gold / Dollars have zigged and zagged opposite each other all year.
Presumably, as fear ratcheted higher due to default concerns in countries like Greece - investors fled the Euro and piled into dollars and gold as a safeguard.
However - lately, and rather quietly, the European sovereign debt worries seems to be abating. Credit stress indicators like the TED spread have put in a clear top and Greek bond yields have also started dropping.
Not surprisingly, the Euro has also begun to strengthen and has broken above the 50 day moving average.
This is clearly a bad sign for gold, which recently had a sharp sell-off.
Anecdotally, trades don't get much more crowded than the gold trade or much less crowded than the Euro trade - and given this mounting evidence I am very enthusiastic about shorting gold at this time.