Thursday September 3, 2020 - 13:22:02 GMT
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Gold Trading is Still the Best Investment Choice in 2020
Even after a pandemic, gold trading is the most lucrative and popular activity among traders. Besides, it is easier to analyze risks, spot patterns, and get involved in gold trading. Gold, after all, is the ultimate safe-haven asset, and currently, it is at an all-time-high value.
Whether it’s the 2008 financial crisis or the coronavirus pandemic, people prefer to trade gold as protection from market volatility amidst uncertain times. And traders know that this surge in demand makes the gold trading more interesting, as volatility is one of the key features traders look for in an asset..
Today, the online gold trading platform is a more neutral and natural component of online forex trading. Traders use technical analysis and filtered basic analytical methods to understand historical insights and support more data.
Gold Trading: What Makes It So Appealing?
Comparatively, gold creates more opportunities for trading in terms of frequency than traditional style forex currency trading. One of the reasons for spiked gold demand is its high investment value.
Traders identify the value of gold in a continuous 24-hour cycle every trading day. However, during the COVID-19 pandemic, gold traders have managed to better understand contemporary market sentiments rather than solely focus on supply and demand shifts.
There are various elements which make gold as a commodity arguably the most desirable investment to increase profitability:
v Inflation Rate
Despite the high inflation rate in most economies, the gold community still managed to render the same value and growth as it did years ago. Unlike property, equity markets, or stocks that can lead to a negative outlook, investors and traders switch to gold to keep a high-profile value in tumultuous times.
v Instability of Traditional Banks
When the financial crisis or the political instability spirals out of control due to external and internal threats, traditional banks bear the heaviest burden. And this is where gold also becomes the top trading and investment choice. In short, it is the safest option to preserve accumulated wealth.
v International Liquidity
Precious metals such as gold provide excellent value when it comes to international liquidity. Furthermore, it makes it simpler and easier for gold holders to sell or trade in any part of the world. In one way or another, someone is always around the corner, more than willing to buy gold despite chaotic market conditions. And that’s because the value of gold (almost) never depreciates.
v Political or Any Other Crisis
It seems that the political upheavals around the world will continue to shake the capitalist order for years. Whether it’s a trade conflict, warfare issue, political clash, or pandemic, gold trading has become the ideal choice for investors to safeguard their investments and generate more wealth.
Some Things Never Change: Factors that Impact Gold Trading the Most
It should not come as a surprise that gold traders and investors view gold as the oldest form of currency that is reliable enough to secure financial vulnerabilities. There are, however, several catalysts that encourage more hoarding of the valuable commodity.
In fact, these catalysts changes depend on market sentiment, market trend, and market volume. From inflation points to market fears to high demand or supply, gold traders can have the opposite response. Mostly, controlled price is due to price fluctuation which increases risk.
Historically, one of the main determinants of gold price point revolves around real interest rates levels. Once the real interest rates are low, other investments like bonds, offer low or negative returns. Naturally, this propels investors to pursue other methods to safeguard their wealth. On the other hand, in case of high real interest rates, cash and bonds generate high returns.
Alternatively, other elements that leave an impact are indicators that affect announcements pertaining to interest rates, consumer price index, and treasury auctions. Furthermore, you may have to look at one of the macroeconomic indicators, such as the GDP or unemployment rate, to assess a nation's economic situation and make profitable gold trading and investment decisions.
Are Methods of Gold Trading Analysis Changing?
Although gold traders and forex brokers can make certain changes in a sequential process, evolving technological advancements can work in favor of everyone’s interests in the future. Nonetheless, when it comes to deciding suitable gold trading tactics, you will have to take into account gold trading fundamental and technical analysis.
Now, it can be a single method approach or a combination of the two to conduct a rigorous assessment. Over the years, there are, however, a handful of strategies that traders and investors use to make the right decisions. Gold trading with a fundamental analytical approach is arguably the most popular option.
Throughout the history of capitalism, humans have understood and are attracted towards the long-term value of gold. Since it is improbable to monitor changes in human perceptions, the majority of consensus suggests that fundamental analysis does not paint the whole picture.
The good news is that you can apply gold’s fundamental analysis via a macroeconomic model. For instance, financial analysts and experts usually assume high gold value despite a high inflation rate, economic crisis, negative real interest rates, and currency devaluation.
You would be surprised how much you can learn about the current dominant state of gold trading from forex brokers. Online gold trading is gradually eliminating the need to own the precious metal physically. Consequently, it allows investors more trading opportunities to test out their trading strategies and approaches.
In essence, online gold trading is practically similar to forex trading. Gold trading is a viable option rather than trade in high-risk devalued currencies. Just like trading foreign currency, gold trading allows you to either take a long or short-term position in the market. However, your gold position does not have to be in alignment with the USD or EUR.
If you are ready for gold trading, you should be able to find reliable forex brokers that offer great spreads. Ideally, you should keep an eye on changing market patterns of this unique commodity and take into account the expertise of gold traders.
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