Gold Price Hangs Tough As US Dollar Dominates Proceedings
Gold Price Hangs Tough as US Dollar Dominates Proceedings
The USD has been falling sharply and has eased financial conditions, providing a tailwind for gold. The dovish-accommodative policy stance of the Fed and an extended period of low interest rates have aided in this decline, making gold a safe haven asset and driving long positions.
As the USD continues to weaken, it will be important for traders to remain vigilant in their trades. This is because gold is primarily priced in the US dollar and has an inverse relationship with the currency, which means that trading it can be risky if overexposed to the single currency.
Where to for XAU/USD
As a currency pair, gold tends to fluctuate in a range and will often cross over moving averages, which is a common chart pattern. Traders can use this pattern to identify buy or sell opportunities on the pair.
Real Interest Rate Trends
Historically, gold prices rise when the real interest rate dips below 1%, while the opposite is true for gold when the real interest rate rises above 2%. This is because real interest rates affect the inflationary potential of gold.
Government Purchases of Gold
Many central banks around the world purchase large amounts of gold to help stabilize their currencies and keep the exchange rate stable. These transactions can have a major impact on the value of gold, so traders should watch closely for any large-scale purchases or transfers.
Geopolitical Events and Increased Demand
Gold is also affected by geopolitical events that can have an effect on the supply of this precious metal. For example, if a country experiences a terrorist attack or an earthquake, this can have a negative effect on the market.
Moreover, increased demand for gold can also have an effect on its price. For example, if the medical industry begins to incorporate the material in medical products, this can drive up prices.
Traders who are looking for ways to profit from the rising price of gold should consider a forex broker that offers a gold CFD. These brokers offer a low minimum deposit, high leverage, and excellent cost-services benefits to help you build your gold portfolio. They also have bonus programs that can provide a significant boost to your trading strategy.