Trade Gold – the most demanded asset throughout the years
Profit from daily price changes when you trade gold and other commodities with OctaFX
Gold has always been a reliable investment when the markets or world politics are unstable. The total stock can’t be easily expanded, and unlike stocks, it’s not at risk of company collapse, so it’s often used as a bolster against inflation or currency instability.
Very popular now among online forex traders, gold can offer easy profits for low stakes, and makes a useful feature in a diversified portfolio thanks to strong trends and high volatility.
Why trade gold with OctaFX
No round-turn commissionsMost brokers charge fees for entering the forex market, but at OctaFX you can forget about commission and focus on forex trading and making a profit.
Tight spreadsWe’ve minimised your trading costs, and we offer some of the lowest spreads in the forex industry.
All your favourite assets in one platformChoosing MetaTrader4 or MetaTrader5 allows you to trade commodities, indices and currencies using advanced charting tools and one-click trading.
Flexible leverage of up to 1:100Using leverage gives you much larger market exposure for a relatively small initial deposit. In other words, it amplifies return on your investment if you're of the right side of the trade.
Free market insights from our analystsStay on top of the market with market news and analysis delivered straight to your forex trading platform or mobile phone.
Diversify your investmentsGold is reliable, dependable asset with conveyable value, that is often used as a hedge against high inflation or periods of currency devaluation
Gold Price historic change
Gold Reserve act signed by President Franklin D. The Act transferred ownership of all monetary gold in the United States to the US Treasury and prohibited the Treasury and financial institutions from redeeming dollars for gold.
The Bretton-Woods Agreement. That made the U.S. dollar the global currency. Under the agreement, currencies were pegged to the price of gold, and the U.S. dollar was seen as a reserve currency linked to the price of gold.
President Nixon told the Fed to stop honoring the dollar's value in gold. That meant foreign central banks could no longer exchange their dollars for U.S. gold, essentially taking the dollar off the gold standard.
Gold standard ends. The price of gold went up in the free market
The Federal Reserve's attempts to fight stagflation only worsened inflation. Between 1971 and 1978, it raised the federal funds rate to fight inflation, then lowered it to fight recession.
Traders had bid the price of gold to $594.92 as a hedge against double-digit inflation.
Expansion. Investors turn to stocks.
Expansion. 9-year gold bull market starts.
Debt crisis. Gold hits record $1,895. That was the end of a bull market in gold that started in 2000. Before then, gold usually hovered around $300-$400 an ounce.
Expansion. Gold falls. Stocks rise. US Dollar strengthening
Gold falls to $1,050.60 on 12/17.
Gold price In the end of 2017 — $1,302.50
What influences Gold price?
Gold’s stability as an investment can be traced back to its predictability. Although gold is found and mined every day, it’s in relatively small amounts, making it extremely unlikely that the market will be suddenly flooded. It’s also largely unaffected by local- indeed it has historically been used as insurance during times of fiscal instability.
When the world enters a lengthy period of upheaval, it’s easy to identify investors moving their money into gold, as demand and consequently price rises. Because it’s priced in US dollars, potential futurealso drives the price up.
Measures of economic health such as, interest rates, inflation and employment can all influence the value of gold on the Forex market, as can central bank monetary policy and the general flow of supply and demand. A sensible investor will take all of these factors into account when investing in gold.
What is the correlation between gold and the U.S. Dollar?
Wherever you are in the world, gold is traded using the US dollar as the benchmark. This creates a unique relationship between the currency and the. Daily fluctuations in the dollar’s value will often feed through into the price of gold.
So how does change in the US currency’s value affect gold? The traditional way to explain this is that as the value of the dollar surges, the price of gold drops, and vice-versa. However it isn’t always that simple, and due to worldwide supply and demand among gold traders, sometimes both have risen hand in hand.
Between 1900 and 1971, the gold standard firmly linked the value of a single unit of a currency to an amount of gold. When that standard was abolished, that bond was broken, and could be valued purely on availability and requirement. This made the US dollar a– a very popular reserve currency, and is traded on foreign markets. While the dollar is no longer a slave to the value of gold, the opposite still remains true, for a couple of reasons:
When the dollar falls, other currencies rise, increasing local demand and prices for commodities including gold.
Secondly, dollar investors start looking for more stable alternatives such as gold investment.
So what scenario can cause both gold and the dollar to rise at the same time?
The main reason is usually instability somewhere else in the world, which causes foreign investors to look for the safest possible havens, often the US dollar and commodities including gold. The dollar’s value can be driven by any number of factors - inflation, monetary policy, foreign politics, trade - so its movements are often unpredictable even for experts.
One thing is certain though - the gold standard isn’t coming back any time soon, so the gold price will continue to be governed by the fortunes of the US dollar and worldwide demand for precious metals. This means that its future as a sanctuary for investors against falling currencies, chaotic markets and political and economic instability is all but assured.
Take advantage of the daily changes of the gold price
Trade gold and other commodities with a reliable Forex and CFD broker
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