Gold and its impact on the foreign exchange market.
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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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    This is very nice explanation about gold metal with other forex currency pairs and on this market. Gold is very precious metal and I really like to trade with it but I do not know that its also impact on other currencies pair because my concept is that this pair is move to follow the dollar. If dollar is strong then gold is weak and when dollar weak then gold become strong but I am totally wrong this is total a different situation of this metal impact on this market.

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    Quote Originally Posted by mao View Post
    This is very nice explanation about gold metal with other forex currency pairs and on this market. Gold is very precious metal and I really like to trade with it but I do not know that its also impact on other currencies pair because my concept is that this pair is move to follow the dollar. If dollar is strong then gold is weak and when dollar weak then gold become strong but I am totally wrong this is total a different situation of this metal impact on this market.
    In forex every pair is linked to each other you can notice it that when Yen is move up then gold goes down and when its move down then gold is move up side. So you are need to understand the linked between different pairs of forex market then you will be able to make on forex. gold is linked to every pair and its very important for every country economy to reserve the gold for their strong economy.

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    Quote Originally Posted by Wechs View Post
    In forex every pair is linked to each other you can notice it that when Yen is move up then gold goes down and when its move down then gold is move up side. So you are need to understand the linked between different pairs of forex market then you will be able to make on forex. gold is linked to every pair and its very important for every country economy to reserve the gold for their strong economy.
    Oh right forex is very vast business and we must need time to learn this business with detail. Experience is also so much important for us because you have good experience then you are learn these links between the currencies and metals. I realized now that my knowledge is so much low about this business and I need learn many new things now about forex.

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    Quote Originally Posted by mao View Post
    Oh right forex is very vast business and we must need time to learn this business with detail. Experience is also so much important for us because you have good experience then you are learn these links between the currencies and metals. I realized now that my knowledge is so much low about this business and I need learn many new things now about forex.
    In Forex the main thing is traders experience of this business and when you have good trading experience then you can make good profit from your trading easily. I like to trade with gold pair which is reason I select that topic which is also help me to understand this pair n better way and This pair knowledge is also help us to understand forex market well.

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    Quote Originally Posted by Wechs View Post
    In forex every pair is linked to each other you can notice it that when Yen is move up then gold goes down and when its move down then gold is move up side. So you are need to understand the linked between different pairs of forex market then you will be able to make on forex. gold is linked to every pair and its very important for every country economy to reserve the gold for their strong economy.
    No its combination with yen is not possible because I see it from last three years and trade on it. I never seen that Gold is move with yen you are feel it because usdjpy and dollars movement is same. If dollar is move upside then its move up side and if dollar is move down side then its move to down side. So you are need more learning which is help you to understand this market well. Gold is most important pair on this world and all world strong economy is depend on gold.

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  7. #7
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    Quote Originally Posted by zahra2 View Post
    No its combination with yen is not possible because I see it from last three years and trade on it. I never seen that Gold is move with yen you are feel it because usdjpy and dollars movement is same. If dollar is move upside then its move up side and if dollar is move down side then its move to down side. So you are need more learning which is help you to understand this market well. Gold is most important pair on this world and all world strong economy is depend on gold.
    I share my observation about it because I see from last six months that Gold and usdjpy movement is opposite to each other and from that day I want to know that why this thing is happen. SO may be I am wrong because dollar and usdjpy movement is same and gold movement is always opposite side of dollar.

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    Its a nice thread for those traders who are like trading on Gold and I also like this pair and I trade only with gold pair. This pair is risky for trading but when we are take some risk then we will be able to earn good money with this pair trading. Its impact is big on this whole market but I do not how its impact but after read this thread I know that gold rile is very important on this market movement.

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  9. #9
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    Quote Originally Posted by stable View Post
    Its a nice thread for those traders who are like trading on Gold and I also like this pair and I trade only with gold pair. This pair is risky for trading but when we are take some risk then we will be able to earn good money with this pair trading. Its impact is big on this whole market but I do not how its impact but after read this thread I know that gold rile is very important on this market movement.
    Thanks for your complements. I do not trade with this metal because its too much risky but mostly traders re like to work with it which is reason this is very important currency pair of forex market. Gold reserve is very important for all countries and make their economies strong and in forex this is also important for all countries to contribute their share with gold.

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  10. #10
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    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.

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