Gold Price Analysis

efore the economies operated into the cash-based economy. the trade, commerce, and economies were managed by Gold, in such a system, each currency has to mention the value of its currency on the basis of gold. It was the inability to transfer gold and use it in everyday commerce that led to the creation of paper currency. But to give that paper value, it had to be convertible to gold.

nowadays gold is also traded as a major currency globally and US Dollar is also the global currency so gold and US Dollar are the counterpart of each other and always react opposite to each other.
other than technical analysis there are many points to analyze the gold price fundamentally.

Major Factor For Gold Price Analysis:

Following are major crucial  economic factor that mainly derive the gold price 

Dollar Strength:

If the dollar strengthens, people would prefer to spend less on gold and keep their spendings intact. This reduces gold prices. thus boost in the American economy will lead to weakness in the yellow metal.

Interest Rate:

High-interest rates will encourage people to save more and spend less on any commodity. Again, people will less interested to spend in gold thus the price of gold will go down as supply will increase due to less demand and vice versa

See Also: crude oil inventory trading

Inflation:

Increasing inflation will make your money vulnerable to depreciation. Investing your money in a stable commodity seems like a better option for many. In such times, demand of gold increases to its price increases

Economic instability(crisis):

World wide economic instability leads to fear in the stock market so more people will spend in yellow metal for their safe side 

Some other factors that define the movement of gold price in day to day trading like gold-silver ratio, demand, and supply of gold, many central government policies that affect the price of gold

IMPORTANT THING FOR DAY TRADER:

Gold is a major instrument in forex and Indian trading exchanges and traded day to day basis in the large amount so there are following things to keep in mind while trading.

  

*     Keep a close watch on every economic event that can affect the gold price especially USD related event

*     Always do correct price-volume analysis of daily weekly chart. and trade with only the precise support resistance level

*     Always analysis gold-silver ratio for better trading experience 

*     During any economical event the volatility of gold become more so trading during this period may be risky but right interpretation of data can give you healthy result.

*     Always close all your position before any macroeconomic event due to high volatility.

Read also: why people lose in the stock market.

GOLD PRICE RELATION  WITH MAJOR CURRENCY PAIR:

*Gold -Doller index:       As Gold and Doller index both are the global currency and traded inversely with respect to each other thus bullish sentiment in dollar index will lead to bearish sentiment in gold

*Gold-AUD/USD:        Australia is the third-largest gold producer in the world selling out about $5 billion worth a year As AUD/USD price goes up,  the gold price also moves up.

*Gold-EUR/USD:       Since both euro and gold are considered anti-dollar if the price of EUR/USD goes up, gold price may also go up.

*Gold-USD/CAD:       As known Canada is the 5th largest producers of gold in the world.the pair goes up,  gold price tends to move up