The GKFX webinar "The Trading Sessions: Why the Gold Price Could Have a Big Boost" on March 8th, 2018 deals with the question of whether the gold price has left its overall downward trend that has been going on since 2012 could. At the beginning of 2018, a slight upward trend in the gold price was observed, similar to the past four years. However, the gold price repeatedly fails due to an important resistance zone. Dr. Hamed Esnaashari answers the question why the gold price could face a big surge. He explains which technical and fundamental reasons stand for breaking through the resistance zone and which strategy would make sense in this case.
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supply and demand on the gold market
The gold price is the market price for gold, a precious metal. It arises from supply and demand on the world's commodities exchanges. The gold price is usually given in dollars and is therefore closely related to the dollar rate. The main trading centers for gold are in Zurich, Paris and London. Many factors, such as the dollar exchange rate, the oil price, interest rates and prices for other precious metals and metals, including silver and copper, have an impact on the gold price. There are also influencing factors such as fear of inflation or political events.
When it comes to the gold price, you should always keep an eye on market participants. Here, for example, central banks and other players who themselves have large quantities of gold play an important role and can have a major impact on the market. For example, central banks can sell gold to raise the price.
Since ancient times
Gold has been known and sought after since ancient times. From an early age, it was not only used to manufacture jewelry, but also as a means of payment and investment. At the beginning of the 19th century, the so-called gold standard was introduced. Any citizen could exchange their money for gold at a central bank to protect their money from inflation. At that time, the gold parity was the applicable exchange ratio. At that time, the British pound became the leading currency for gold. Back then, silver was more important than gold in the United States. However, the gold price rose significantly for the first time during the American Civil War.
Around 1870, the gold standard gradually became established throughout the world. The gold standard is a monetary order that expresses that a currency with coins consists of gold or banknotes that are eligible for gold. These can therefore be exchanged for gold. In the pure gold standard, the total money supply of a country corresponds to the value of the gold standard. A fixed exchange rate applies. However, many countries tie only a portion of their amount of money to gold. This procedure became more common with the use of banknotes.
Gold as a speculative object
For many investors, gold is a speculative object like a stock. You buy a certain amount of gold at a low price and aim to sell it again at a higher price at a profit. You can buy gold directly or invest in gold from a broker via certificates, CFDs, funds or ETFs.
In times of crisis, gold is still considered a safe investment instrument. Even if hyperinflation is feared, gold is the saving anchor for many investors. When stocks or funds lose value, the price of gold often rises. Therefore, the gold price is also considered an indicator of impending inflation.
Gold price with ups and downs
The gold price is constantly experiencing ups and downs. Between 1980 and 2000 there was a 20-year downward trend. The reason was, among other things, an economic upswing in the USA under the presidency of Bill Clinton. In 1999 the gold price reached its lowest point. From 2001 it went up significantly until 2012. This upward trend ended in 2012 and has been going down for seven years now.
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Crises between 2001 and 2012
Between 2001 and 2012, government debt in the United States strong and the dollar exchange rate was low. In 2005, the gold price broke the $ 1,000 mark for the first time, and in 2011 one troy ounce of gold in New York was worth $ 1,500. The gold price also rose in the financial crisis. In addition, the debt crisis in Europe and the protest movements in the Arab region had an impact on the gold price. In the fall of 2011 one could look forward to an all-time high of $ 1,920.65 and shortly thereafter a record price of € 1,388.62 in Europe. At that time, concerns about the financial situation of many European countries were very great.
Downward trend of over seven years
In 2012, the continuing downward trend began. In the spring of 2013, one troy ounce of gold was worth less than $ 1,500 on the NYMEX raw materials exchange in New York and was only $ 1,200 at the end of the year. The trend then initially developed into a sideways trend around $ 1,250. However, there were always swings up and down. For example, one troy ounce of gold was worth about $ 1,3000 at the end of last year. Large fluctuations are not uncommon on the gold market. Sometimes the price of gold can fluctuate significantly within a very short period of time. Often you see the phenomenon of a rising gold price when the dollar goes down and vice versa.
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Price drops over a longer period
Dr. Hamed Esnaashari sheds light on the reasons for a possible end to the downward trend in the GKFX webinar "The Trading Sessions: Why the Gold Price Could Be from a Big Boost". A downward trend always arises when the price for an investment instrument falls over a longer period. The opposite is an upward trend. Even if the overall trend goes down, there can always be movements up and down. A temporary price increase is therefore not unusual even with a downward trend.
In the chart analysis you look at the peaks and valleys of a trend. When the peaks and valleys are lower and lower, there is a downward trend. The chart shows low high and low points. Each new low is still lower than the previous low and even a high is lower than the previous high.
Trend shows development of an investment instrument
A trend always shows an extraordinary Development of an investment instrument in a certain direction. In the first phase there is a movement in a certain direction, followed by a course correction before moving on in the direction you have chosen. There are upward and downward trends, but also sideways trends, for which there is no clear trend. A trend is always characterized by the two phases movement and correction. Characteristic features become clear here. The strength of the expression shows how important the trend is for retail. A trend is always based on the activities of all market participants. The result of their actions is ultimately shown in the chart. Fundamental or political reasons can also be the cause of a certain trend.
Recent development of the gold price
Since mid-2016 the gold price has repeatedly encountered the important resistance zone between $ 1,350 and $ 1,375, but cannot overcome it. A resistance zone (also called a resistance line) means price limits that are difficult to break through for an investment instrument. To determine a resistance zone, technical chart considerations are necessary. Occasionally, however, the fundamental analysis also shows price limits. The overarching situation in the chart currently indicates that the gold price will soon be able to break through this resistance zone. This could stop the downward trend that has existed since 2012.
Price increases since mid-2017
Since autumn 2017, the gold price has increased. The price overcame some important resistance zones. This has been a slight upward trend for several months. Especially in December 2017, the gold price was relatively high. A possible reason for this price increase is the weak dollar. Gold and dollar prices are closely linked. When the dollar drops, it's not uncommon for the gold price to go up. The weakness of the dollar at the end of 2017 is closely linked to the political and economic situation in the United States. Many investors fear an increasingly protectionist trade policy under President Donald Trump.
CFD trading in gold at GKFX
GKFX offers CFD trading in raw materials. This broker can also trade currencies or CFDs on stocks. In addition to precious metals, there are other metals such as palladium or crude oil to choose from. Traders rely on the price development of the underlyings with CFDs and therefore do not buy the raw materials directly. For precious metals, GKFX also offers silver and copper as an underlying. Trading in precious metals can start with a small trade size of 0.01 lot. Gold is quoted against the dollar price and is practically a currency. CFD trading in gold at GKFX begins with depositing a margin and is a ongoing contract.
offers a choice between four account models
GKFX four account models that are tailored to different trading types. Even beginners will find an account that fits their needs. The offered leverage and spreads vary depending on the account model. In addition, GKFX offers numerous training materials that are aimed at beginners and advanced users.
Conclusion: Gold price could break through the resistance zone
Are you interested in the current situation on the gold market? Then you might be interested in the GKFX webinar "The Trading Sessions: Why the Gold Price could be from a Big Boost" on March 8th, 2018 at 6 p.m. The gold price has been in a major downward trend for almost seven years. Since autumn 2017, however, things have been going up slightly again. The reasons for this could be the weakness of the dollar and concerns about a protectionist trade policy in the US>do not break important resistance level of $ 1,350 to $ 1,375. Currently, however, technical and fundamental reasons could indicate that the gold price will soon overcome this hurdle.
However, fluctuations upwards are not uncommon even during a downward trend. The gold price is often strongly influenced by factors such as the dollar exchange rate, interest rates or fears of inflation. Gold is still considered a safe haven, especially in times of crisis. Between 2001 and 2012, gold saw an upward trend. This period was marked by many crises and uncertainties such as the financial crisis and the protest movements in Arab countries.
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