Forex Education

Trading industry knowledge. Learn forex trading, investing in stocks, commodities.

You are here: Home / Archives for Commodities / Metals / Gold

How to Trade Gold? – Learn Gold Trading

by

Gold Price Chart, Monthly Timeframe

dollars.

Gold chart is presented below:

Another way to use the technical analysis is to look back at the price movements in the gold price chart. These previous prices can help the trader determine what he can expect in the future and the possible profit targets they should set for. Also, the resistance and support line can be easily drawn. A line drawn by connecting the previous higher lows shows a support line when the market is experiencing a downtrend. On the other hand, when the market is in an uptrend, the line drawn upon the previous highs works as the resistance for trading. Traders with more experience find using other technical tools, like Fibonacci Retracement, Elliot Wave analysis, and momentum indicators, more efficient to use.

Gold Trading and Its Strategies

From the beginning of the trade, gold has been of utmost value to anyone who wishes to own an asset or maybe trade. With time, the ways to own and trade gold have significantly changed. Earlier buying and selling of gold meant to have gold physically being purchased, stored, and then sold when the market price is favorable for the trader. It required much time and effort from the trader. But with time, the scenario changed. With stock derivatives being introduced in the market, people got the opportunity to trade in gold while they don’t even have to buy it physically. With the introduction of Gold Exchange-Traded Funds and other options, trading gold is no different than trading any other stock. 

Trading gold was made possible due to numerous strategies that were introduced. However, it’s a plus point that gold is an asset that increases or decreases the value of a bank account and can be kept physically. Nevertheless, many traders still prefer to trade it like a stock freely. And for that, the trader should be well aware of the primary factors that affect the supply and demand and, therefore, the market value of the gold, keep track of the gold price chart, and always be aware of the positions of other gold traders in the market. While these factors and analyses can help the trader understand the gold trend in the market, the gold price chart can help the trader know the entry and exit points in the trade.

How to learn gold trading?

To learn gold trading, you need to learn :

Gold Trading and Forex Trading

People mostly see gold as an essential asset that can be stored because gold will still hold its value no matter what happens economically. This is because its importance can never be brought down to zero no matter how bad a country’s economy suffers, what policies are introduced by its regulator, or the inflation rate that can even decline the currency to nothing. Therefore, gold has a global value and is recognized almost equally by every economy. 

Gold has proved itself to be a hedge against inflation. It is an asset that is considered as a haven asset amongst others like the Swiss franc, Japanese yen, and US treasury bonds. Traders use these assets in two situations. One, they purchase these assets when the risk trend is uncertain. Second, they tend to sell these assets when other stocks and securities offer higher interest rate opportunities. Therefore, Gold is a safe option for traders not to lose their funds.

However, specific points differentiate gold from forex. They are:

  • Unlike other currencies, gold can only be traded against the USD. This means that Gold and the USD are indirectly proportional. If one goes up, the other goes down. So, the traders should always keep track of the value of the US Dollar while trading gold. 
  • Although the forex market can experience comparatively low liquidity after the close of the New York market, gold experiences high liquidity almost 24 hours a day, the route of this 24 hours cycle starts with London and Zurich moving to New York, then to Sydney to Hong Kong, from there to Shanghai, and ends up with Tokyo, and finally, Europe retakes charge.
  • Apart from some big currency pairs like EUR/USD, GBP/USD, or USD/JPY, the liquidity of gold is more than any other currency pair. This means that the volume of gold traded in a day, on average, is higher as compared to other currency pairs (apart from the bigger ones)

Technical Analysis of Trading Gold

Technical analysis can help the traders study the previous moves in the price momentum of the gold and determine their future actions. The evident changes in the price chart of the gold have proved the significant change in its value as an asset amongst the traders. The charts show that the volume of gold was lower than after 2015, which falls between the range of $1000 to $1400. Therefore, it is also suggested the traders use the technical analysis tools that complement the market situation. For example, the range strategy or low volatility strategy is suitable when the gold chart shows the range-bound trend. On the other hand, momentum strategy can be used if the market is in trending mode. 

 

Trading Gold Tips  

  • Always keep track of the US Dollar along with the market value of the gold.
  • Gold is an asset that can be purchased both physically and can be traded like a stock. So, the traders must consider the mix of different analyses while trading in gold.
  • Traders can also keep track of the policies formulated by the central banks regarding the buying or selling of gold to keep track of its retail demand. Also, considering the demand for gold jewelry.
  •  Consider the supply of gold in the market equally important as demand. 
  • Apart from retail demand, industrial demand for gold also influences trading strategies.

Gold trading strategies for beginners and superior traders can differ as their knowledge and targets are also different. A beginner will not jump into the market with all his available funds. He would definitely try to start little by little and understand the market first, no matter how promising the gold trading may look. The trading strategy for beginners starts with basic market sentiment analysis. A new trader must be aware that the market sentiment and the price are indirectly proportional. If the market sentiment is negative, the prices are likely to rise, and if the market sentiment is positive, the prices are likely to fall.

On the other hand, traders with more experience will have more knowledge of the market and have many strategies. They know what the crucial points that need to b considered while trading in gold is. For instance, they know that the US dollar value plays a big role in evaluating the gold price in the market, so they always keep track of the currency’s movement. Also, with the evident popularity that gold jewelry enjoys, especially in countries like India and China, traders keep an eye on such opportunities and demands. Apart from the fact that it is considered a storable asset in these countries, central banks also provide the opportunity to buy and sell gold jewelry. Considering the supply of gold in the market is equally important, just like the demand. For that, traders keep track of the production of gold by its major producers like Newmont Mining and Barrick Gold. 

Apart from these tips and rules, the strategies and practices used while trading in forex is all applicable when trading in gold. Risk management, leverage, stop loss, and profit targets are some of these strategies. 

 

Gold Price Prediction 2021 – Is Gold Going Up?

by

Gold and global instability

It is safe to say that coronavirus made 2020 an unstable year, and even 2021 doesn’t seem to look a lot different than it. Lockdowns across the world, Black Monday and Black Thursday that made history in the stock market, the Russo-Saudi Arabian oil price war, delays in the Brexit deal, hectic and controversial US presidential election; a lot happened last year. 2021 seems to take after this socio-political-economic stability with the military declaring a coup in Myanmar and overthrowing its democratically chosen leaders.

It is a fact that whenever there is global instability or turmoil, currency, any currency, is given the backseat because precious metals take over. If we look back and go through the market trends of 2012 when everyone believed that the world would end, gold prices reached a new high, and the precious metal enjoyed a bullish market in the next year. History repeated itself in 2020 when gold became the first choice of investment for many amidst the rising political and economic uncertainty. 

The yellow metal became the preferred choice of those who wanted to averse to risks and diversified their portfolios. Gold prices went as high as $2000/ounce in 2020, but the question that many investors are asking now is if gold prices will remain this high in 2021 as well or not. Will they go beyond $2,000 per ounce?

Let’s recap gold’s performance in 2020 and throw light on some older facts as well. We will also discuss the factors that may drive its value in 2021. We will also review the latest gold price forecast for 2021 through some famous analysts’ eyes.

Gold price today in the USA

dollars.

XAUUSD Chart by TradingView


Gold price this month chart is presented below:

1 troy oz gold is worth as 1.097-ounce gold or 31.1 gold grams. Currently gold price per ounce is . To get 1 troy gold price you need to multiply gold price with 1.097.

One tola gold is equivalent to 10 grams of gold. 10 tola gold price is the same as the price of 100 grams of gold.

Gold Price Forecast 2021

Is Gold Going Up?

Yes, the gold price is going up in 2021. because of the following factors:

  • The real Interest rate is negative.
  • US Inflation is rising.
  • Investors invest in metals more than in bonds.
  • Potential crisis in the second part of 2021.
  • Technical analysis shows a bullish pattern on daily, weekly, and monthly charts.

Gold price forecast for 2021. year close is around $2000.However, silver is going up faster than gold.

We are well into the first half of the year 2021, and while everyone is hopeful because of the vaccine, its manufacturing is still limited. Many people are displaying negative reactions to it. We can see the economy recovering, and people are slowly returning to their old routines but will this be enough? Let’s see what the analysts have to say about the yellow metal.

An analyst at Capital Economics, Samuel Burman, shared his views on the topic. He believes that there will be a significant recovery in economic activities because people have started getting vaccinated. He also sees the probability of further selling of ETFs backed by gold. Even though he sees economic recovery, he is positive about gold. According to him, the finding of an effective vaccine will not bring down gold prices, and 2021 will be good for gold.

He also believes that persistently low US yields are highly likely to support gold demand. It will ultimately offset a large chunk of weakness associated with a rise in risk appetite. This will result in stabilizing gold rates at around $1,900/ounce by the end of 2021.

Sharing their gold price forecast, Goldman Sachs’ analysts firmly believe that their bullish outlook for the yellow metal will persist in the upcoming year. It is likely to reach a price target of $2,300 per ounce. They persist that the structural bull market for this precious metal is not yet over. They think that it will resume in 2021 as inflation is expected to move higher. It will subsequently weaken the US dollar. They do, however, maintain that it might be difficult for gold to maintain any momentum in the market in the short term.

Citibank also has a similar view.  Their analysts ushered in their gold price prediction that they can see the metal reaching $2,200/ounce in the next three months and to $2,400/ounce within a year.

Analysts at the Australian bank, ANZ, predicted that gold would reach $2,200 per ounce as 2020 culminates. They are also highly optimistic and believe that the prices can easily reach $2300 in 2021. However, we believe that this will likely be the highest price for the commodity this year.

Jim Steel of HSBC is the bank’s chief precious metals analyst. As per his predictions, the metal will likely cost $1,965/ounce in 2021. He believes that it will strengthen in the first half of the year. It may even see some moderation in the other half, but that is just the average. This means that the prices will likely stay close to $2,000 for some time and drop to $1,900 in the second half of 2021.

However, Steel did warn investors by saying that the yellow metal is susceptible to geopolitical risk. The rapprochement on the trade issues can change the game altogether. Now that the geopolitical system has changed and the new Biden administration is in power, it is still difficult to predict how the USA’s trade relations with other countries will pan out. The Biden administration will likely form close allies with other nations, which went sour under the previous administration. This is likely to impact trade positively, thus, bringing down the price of gold.

Trading Economics, unlike others, has bearish gold predictions. According to it, the precious metal prices can easily drop to $1,749/ounce within the course of 12 months.

An online forecasting source, Wallet Investor, has a different opinion. It believes that the metal will most likely 2021 at $2,124/ounce; and $3,048/ounce in 2025.

Analysts at Heraeus Precious Metals shared that the worsening global situations because of the pandemic weaken the economies, which has ultimately triggered the selling of commodities and assets in the financial markets. Gold was also amongst the things which were sold off. The gold price has a strong inverse relationship with US bonds.

Gold’s Performance in 2020

We are in the first quarter of 2021, and it is too soon to predict anything, but it would be easy to predict the future of gold by looking at how it performed last year. In 2018, gold lost its edge and fell to $1800 per ounce. However, it had an astonishing recovery in 2019 when it surged by almost 20% and closed the year at $1,519/ounce. The trend continued into 2020 when its prices rose to $1,672/ounce by February 24, 2020. It is interesting to see that this was when the governments had just started taking coronavirus seriously.

In mid-March of 2020, the broader market sell-off witnessed a downfall in the prices of gold. At that time, it was trading at $1,477/ounce. But, it rapidly hiked past this rate as unprecedented economic stimulus, and low-interest rates boosted investor interest in gold that is often seen as safe-haven assets.

In early June 2020, the market dipped yet again, only to break through its previous records. It reached an all-time high later in the summer of last year. On 6th August 2020, gold prices sat comfortably at $2,070/ounce. This was an exceptional growth of 35% compared to the beginning of 2020 and 40% compared to March’s lows. This spike’s driving factors were the weakening of the US dollar and several significant economic and geopolitical events happening in the global arena. Some of these events were the EU’s agreement on a €750bn coronavirus recovery fund. Another one was the closure of the Chinese consulate in the US.

September presented some good days for the USD, and the currency started to pick up. As a result, the metal retreated and was trading between $1,900-$1,950/ounce. It dipped to $1,865/ounce at the end of October, but the uncertainties regarding the US presidential election pushed the precious metal up, and it peaked at $1,960/ounce on 9th November 2020. But, as soon as Pfizer announced its Covid-19 vaccine, the gold market fell a little, and it was trading at $1,900 per ounce.

It is important to note how economic and socio-political stability is inversely proportional to gold prices. As soon as the conditions stabilize, gold prices begin to pull. Similarly, when the USD strengthens, gold prices become weak.

Let’s Do a Quick Recap

Before we begin to dig deeper into the gold forecast for this year, let’s quickly revise the latest trends that can potentially drive gold value going forward.

It is crystal clear that political and economic instabilities act as fuel for these precious metal prices. More uncertainties mean higher gold prices, and the year 2020 was full of nothing but these uncertainties and shocks on a global level. Investors, to hedge their portfolios, have moved to metals, especially gold and silver. They are adding these to their holdings in every shape and form.  Gold bullions, stocks, exchange-traded funds (ETFs), and whatnot. This, in turn, is lifting the gold’s value higher.

In 2020, in addition to other issues, inflation was also on everyone’s mind. As governments tried to compensate for the damages done by Covid-19, in the form of quantitative easing and fiscal stimulus, trillions of dollars were allowed to enter into the global economy. McKinsey conducted research and concluded that this 2020’s stimulus had already exceeded the previously taken measures during the global crisis of 2008-2009.

As there was more currency in circulation, investors felt that its value had decreased. This encouraged them to switch from the USD to precious metals, especially gold.

If we are talking about the near future, the most important factor determining if gold prices will go up or not is the coronavirus. The cases start going down by the end of 2020, but now the world leaders are bracing themselves to deal with its second wave. The cases have started to rise again, and the governments are talking about reinstating lockdowns. In some places, the governments have already imposed short-term lockdowns. This will make things even more difficult for the economies that are already struggling. If the governments decide to introduce a new stimulus plan or introduce fresh fiscal, it will again push gold prices higher.

The question again is if gold prices will go up in the future. It will depend on whether or not the global economy continues to remain stagnant. Factors like the continuation of the pandemic and continuously rising geopolitical tensions will definitely impact the already disturbed international trade. It doesn’t seem like the situation is getting any better. If this continues, gold prices will be climbing higher. The new prices might even break previous records.

Conclusion

Is gold a good investment for the year 2021? While no one can predict any financial instrument’s exact future, it is safe to say that most forecasts favor the metal. These predictions point that the prices of gold will either increase in 2021 or remain steady.

One must keep in mind that while most projections are generally bullish, the global financial markets, due to the economic and health crisis, remain highly volatile. This makes predicting the prices of gold will be rather difficult.

For the time being, we need to keep our eyes on the prices of the metal and think thoroughly before investing.

Gold Pip Calculator

by

Calculating pips for gold is easy to process in MT4 when traders trade in lots. For example, if you are a Metatrader trader and trade 1 lot XAUUSD profitable trade from 1800 till 1801 or 100 pips, you will earn $100.

So 1 pip in XAUUSD, for 1 lot trading size is worth $1 in MetaTrader.

Gold pip calculator represents the simple calculation of earnings based on trading size and trading pips when traders trade Gold instruments. The gold pip profit calculator is presented below.

Indian Gold Buying Season

by

Gold is a precious metal that is acceptable as an asset all over the world. This is because it has a common value and is acceptable as it is throughout the world. That means you don’t have to get it converted into some other form or carry any legal paperwork (except for some cases where quantity is restricted) to take it with you while traveling. Due to this, gold is widely popular among investors as well as non-investors. 

Indian gold buying season is between October and February, when people buy gold on a large scale in India, during the wedding season, and India’s biggest festival, Diwali.

One of the places to look at the demand for gold, soaring at every point in time, is India. In India, gold is purchased throughout the year, with skyrocketing demands between October and February (also known as the Indian gold buying season), the Indian wedding season, and the time for India’s biggest festival Diwali. During this time, people purchase gold as it is considered auspicious. Moreover, it is a tradition to wear gold jewelry during weddings and festive seasons. Also, it is a major part of household investments in India. Due to these cultural and financial aspects, India’s demand for gold exceeds 514 tonnes every year. Just like every business has a general reserve for future needs, every household has a gold reserve for the unforeseen future. 

Why is Gold Important in Indian Weddings?

Gold is a tool to showcase the wealth and is considered a blessing of Goddess Lakshmi, a symbol of wealth and fortune. Indian weddings are world-famous for their extravagant celebrations, several days-long affairs, and the head-to-toe dressing up inexpensive clothes and jewelry. Therefore, the Indian parents consider it a blessing to gift gold jewelry to the bride and bridegroom as they believe it will bring good fortune to the couple. It doesn’t matter if the family is rich or poor, they purchase and gift gold to the bride and bridegroom according to their ability, but the gold has to be gifted to carry on the tradition.

It not only brings a fortunate future but also completes the Indian traditional wear. Indian formal wear is incomplete without gold jewelry. This is why the bride wears gold, enhancing the beauty of the whole wedding outfit and the bride. Due to the reason that over 20 million weddings take place in India every year, the demand for gold is always high here and hence playing a significant part in the world market of gold.

Gold Imports and Prices

India does not produce as much gold to meet its ever-growing demand. As a result, a significant part of its gold demand is fulfilled by imports. And due to this high demand, the price of gold surges high in the global market, especially from October to February. It was recorded in 2017 that there was an increase in the spot gold prices due to the surge of 67% of gold demand in India, which was approximately 855 tonnes in that year.

Only Indian demand for gold cannot be the only factor responsible for the price of gold in the global market. Several other factors like worldwide supply and demand, inflation rates, geopolitical factors, weather, etc. Still, such a waste demand from India does cause a significant impact on its prices globally. Not only this, traders and investors find it profitable to exploit the high-end demand time of gold in India. They state that buying gold in September and then selling it in October onwards results in about 80% of cases. The Moore Research Centre even highlighted this study in the year 2016.

If you are interested in trading gold, learn how to calculate XAUUSD pip value.

Other Driving Factors that Affect Gold Prices

It is evident that the demand for gold in India, especially during the wedding season, majorly influences its price in the global market. But there are other factors as well that can influence the gold price. These are:

  • Several countries keep gold reserves in their central banks to protect their currency in the event of inflation and become self-reliant instead of depending upon foreign exchange. The number of such gold reserves impacts the prices of gold globally.
  • The changes in interest rates in the financial market can also influence the price of gold. If the interest rate is low in the market, it results in more purchasing power in the people’s hands. Hence they can buy more gold to keep as a reserve. On the other hand, an increase in the interest rate can influence people to sell their gold and put money in the market to gain better returns. Hence this changing demand and supply affect the gold prices.
  • Since not every part of the world is rich in gold reserves and has to depend upon imports, the duty and taxes imposed can change the gold prices. 
  • During the inflation period, people tend to keep gold as a protection tool. This is because, during inflation, a currency loses its value, but gold remains what it is. So people use it as a factor of protecting their wealth.

Hence, it is always advised to keep an eye on all the factors apart from the Indian wedding season while investing in gold.

How Many Pips Does Gold Move in a Day?

by

What is a pip in gold?
Usually, 1 pip increment in gold is 0.01 increment. So if the gold price is 1800,00, then 1 pip increment is 1800,01.
One pip in gold is $0.01 or 1 cent for 1 micro lot position size. 1 pip in XAUSUD for 1 lot position size is $1. Learn more in our article on how to calculate pips in gold.

How many pips does gold move in a day?
Gold moves around 2000 till 3000 pips by average in the last decade. In the year 2020, gold ranged around  2900 pips. The average moving range for gold in 2020 was 2900 pips, from 1000 to 6700 pips.

gold average true range

Gold can easily swing from 50-400 pips within minutes because large reversals are common for XAUUSD. As a result, gold is a volatile trading instrument, and traders must be careful when calculating risk and position size during gold trading.

If you want to determine how many pips make gold moves in a day, you can use Metatrader indicator ATR, average true range. This indicator can calculate the average number of pips based on the time frame period. For example, if you want to calculate the average number of pips for gold in the last year, go to indicator and set 365 days as the period for observing. Usually, traders use 14 days or 30 days as a measurement.

More about how to calculate gold pips in forex is read on our page.

Spanish language – Hindi Language

Spanish language website Hindi language website