Launched by the World Gold Council and State Steet Global Advisors (STT), the SPDR Long Dollar Gold Trust began trading today on the New York Stock Exchange Arca as the first U.S. listed gold-backed ETF that also hedges against a strong U.S. dollar.

Because gold is priced in U.S. currency, it becomes more expensive for foreign buyers when the dollar gains in value against other currencies. So as the U.S. dollar strengthens gold prices typically weaken.

The SPDR Long Dollar Gold Trust, which trades under the ticker GLDW, is designed to hedge against a strong U.S. dollar. Like its cousin, the SPDR Gold Trust, (GLD) it buys and holds the actual precious metal, not miners or other gold-related stocks. Yet the fund also uses a currency hedge strategy, going long on the dollar against a basket of foreign currencies on a nightly basis. The fund settles those positions every day, receiving payment in the form of gold bars.

Thus, if gold prices rise, investors profit. But they can benefit if the price of gold falls if the value of the dollar rises more. If gold price fall more than the dollar strengthens, then the fund loses value.