Gold and its impact on the foreign exchange market. - Page 2
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Thread: Gold and its impact on the foreign exchange market.

  1. #1
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    Gold and its impact on the foreign exchange market.

    old and other precious metals like silver, platinum and palladium have intrinsic value as hard physical assets with important industrial applications. They also have value due to their ability to store a considerable amount of wealth in a rather small space.Many investors believe that changes in the price of gold can directly affect the economy. There are few industries in which gold costs have an immediate impact. Yet, it's more run of the mill to see gold costs reflect economic conditions as opposed to causing them. How about we investigate numerous ways in which gold prices tend to respond to changes in the economy.
    For example, from the mid-1940s to the early 1970s, gold determined the value of most major currencies in the global forex markets under the Bretton Woods system of exchange rates. This post-WWII system of fixed exchange rates broke down in the early 1970s as then-president Richard Nixon ordered the U.S. Dollar removed from the gold standard.
    Economic strength
    when the economy is strong, resources other than gold have a tendency to perform well. Stocks specifically rise in value, pushing investment demand away from precious metals and other commodities that don't generate any income. By differentiate, when the economy debilitates, interest for stocks and other monetary resources loosens, and that drives more cash toward what are seen to be more to be more stable investments such as cash and gold.
    Currency markets
    All in all, gold costs have a tendency to changes in the value of the U.S. dollar contrasted with other foreign currencies. When the dollar is strong, it means that even if gold prices stay flat in dollar terms, gold will be more expensive in foreign countries whose currencies have declined in value. That tends to cut demand and put pressure on gold prices, driving them down in dollar terms. The inverse is genuine when the dollar weakens, because falling prices in foreign-currency terms make gold more attractive to purchase, thereby raising demand and pushing gold prices upward.
    Inflation
    Inflation threatens the value of financial assets like stocks and bonds, and it therefore makes gold look more attractive as a store of value. Since expansion frequently goes with times of monetary agitation, numerous speculators look to gold as a place of refuge venture for use in the midst of a wide range of misery, running from geopolitical clash to fundamental money related hazard. At the point when speculators never again trust cash, it's normal to swing to gold, and that helps drive costs up.
    Obviously, the way that these and different components tend to move in various ways in the meantime makes it unmistakable exactly how troublesome it can be to see the connection between monetary conditions and the gold market. understanding some of the perceived fundamentals of how the gold market works can help you invest more effectively in the commodity.
    Dollar and Gold
    As of late, as the U.S. government keeps on overspending its salary by an impressive edge,under the guise of stimulating the country’s failing credit-driven economy, investors increasingly look to gold as a way of hedging against the almost inevitable inflationary implications of increasing government borrowing to print more paper money. This has brought about an ongoing backwards connection between the value of the U.S. Dollar and gold. Besides, as post-WWI Germany got the hang of amid its overwhelming hyper-inflationary period in the mid 1920s, this kind of flighty monetary arrangement can be a formula for a cash's defeat and possible substitution by a money connected to gold.
    Euro and Gold
    Since 1980, when gold hit its previous record high of $850 an ounce, the cost of gold had declined slowly until the point when 1999 when it had tumbled to a low of $257 an ounce. Strangely, the low in the cost of gold harmonized generally with the presentation of the Euro in January of 1999. Moreover, until the ongoing Greek obligation emergency in any event, the E.U's. Euro has for the most part ascended in esteem versus the U.S. Dollar due to some extent to a generally unassuming money printing program regulated by the European Central Bank. This stands out from the more dynamic paper cash printing program supervised by the Federal Reserve in the United States.
    Australian Dollar and Gold
    Another intriguing connection amongst gold and monetary standards includes the estimation of the Australian Dollar. Since as gold ascents in esteem, so by and large does the Australian Dollar.
    Essentially, this connection needs to do with the way that Australia has impressive gold stores. Likewise, Australia is a net exporter of gold, and the precious metal makes up a significant percentage of its national exports.
    these factors make the value of the Australian Dollar especially susceptible to fluctuations in gold prices, in spite of the fact that its value is additionally influenced by the cost of oil and other key crude materials. Therefore,the Aussie is often referred to as a commodity currency by forex traders.

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  2. #11
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    Quote Originally Posted by Rola View Post
    I trade gold very rarely. But I use it as type of indicator. When gold is rising EUR is rising too, when falling - EUR falls too. Sometimes when gold is sudenly falling or rising we should wait for some big news. It is possible to foresee something looking at gold chart and movement. I do not imagine how I can trade without the chart of gold.
    You are not need trade on this pair with any indicator you can use your skills and experience to make money on it. You are right Gold is move same as Euro because these pairs movement depend on Dollar and when dollar is strong then gold is move down side but when dollars is weak then its become strong. So if we understand this combination we can make easily profit with its trade.

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  3. #12
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    Many people mistakenly use gold as a definitive proxy for valuing a country's currency. Although there is undoubtedly a relationship between gold prices and the value of a fiat currency, it is not always an inverse relationship as many people assume.

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  4. #13
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    Quote Originally Posted by Sidra View Post
    Many people mistakenly use gold as a definitive proxy for valuing a country's currency. Although there is undoubtedly a relationship between gold prices and the value of a fiat currency, it is not always an inverse relationship as many people assume.
    Gold is most important currency pair of this market and whole world economy. Mostly traders are like to trade on this pair and this pair is highly profitable for all of us. In forex market this is a normal pair like the other market currencies and metals but gold is very important for a country development and its progress and its make a country economy very strong.

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  5. #14
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    A very nice information about the gold and its definitely help us to understand the gold and its impact on market. I never try to trade with this pair because its move big and risky is big involve on its trade. Gold average daily movement is also big which is not suitable with traders trading skills. I only trader on forex with currency market and their risk is very small.

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  6. #15
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    Gold have big impact on this market which reason is that only big investors are trade on this pair and when mostly forex traders are trade on this pair which is cause the impact of gold is big on this market. Gold is also a highly volatile pair of forex which is reason I like to trade on it and I only trade with gold and never trade any other currencies.

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  7. #16
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    Good article about the role of gold in the world. It is one of the main financial assets till now. China accumulates the reserves, Russia and Turkey too. Germany reurns its gold from USA. When inflation is going to rise everywhere central banks accumulates the gold for the special circumstances that can happen in financial world due to everything.

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  8. #17
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    Quote Originally Posted by Giedra View Post
    Good article about the role of gold in the world. It is one of the main financial assets till now. China accumulates the reserves, Russia and Turkey too. Germany reurns its gold from USA. When inflation is going to rise everywhere central banks accumulates the gold for the special circumstances that can happen in financial world due to everything.
    All countries are now now the important the gold which is reason these countries are return their reserve of gold and now these are buy the maximum gold quantity and take reserve of it. In forex exchange market gold role is so much important which is reason all countries are must need to take a good quantity of gold reserves to survive on forex market.

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  9. #18
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    Gold got a big important impact of something big happen regarding policies with gold in the market. Gold is a currency actually with the same purchasing power no matter what. As long we had gold, it will not reduce in value but when gold will shine again is when the world start to using gold standard in currencies once again. That is when gold will be trully valueable but that kind of scenario means the world accepts the failure of current system.

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  10. #19
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    whatever we have of analysing the gold signal remains the strongest pair to know from the strength of the market and the volatility . and also there can be good way to understand about the safe statue between the traders all over the world , so we can make of the good analyzing of the gold to trade every effective while there is a good news to be released on different periods

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