GOLD | FOREX TRADING

Gold Technical Analysis: Nears YTD high of $1,326, weekly RSI highest since September 2011

Gold is fast closing on a year-to-date high of $1,326 reached on Jan. 31 and may break higher toward $1,354 (100-month moving average) if trade optimism continues to hurt the US dollar. 

SPECIAL YEARLY FORECAST

Gold Forecast 2019: Focus on US real interest rates

Omkar Godbole
FXStreet

Gold may face bearish pressures, especially in the first half of 2019, as the real interest rates in the US are likely to rise. The zero-yielding haven metal remained on the defensive for a major part of 2018, despite the US-China trade war, emerging market instability and political tensions in the Eurozone and Britain. That forced many to conclude that gold has lost its safe-haven appeal. Moreover, the US dollar was the preferred safe haven during 2018. Gold felt the pull of gravity, despite a host of risk-off issues across the globe.

1. Latest News & Analysis

XAU/USD News

XAU/USD Analysis

2. Technical Overview

XAU/USD PRICE SENTIMENT

XAU/USD pivot points

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3. Big picture

Gold/Silver Ratio

This ratio normally goes well during risk aversion, while it falls off during times of risk-on. If this ratio is about to turn, or at key levels where it could turn, the trader looks to the Equity indices if the risk has indeed been on and if it is about to turn as well.

When the ratio is rising, it means gold is outperforming silver, and when the line is falling, the first term is doing worse, i.e., silver is doing better. In other words, when the ratio is high, the general consensus is that silver is favored. Conversely, a low ratio tends to favor gold and may be a signal it’s a good time to buy the yellow metal. Despite the gold-to-silver ratio fluctuating so wildly, another way of using it is to switch holdings between silver and gold when the ratio swings to historically determined "extremes."

Read more about gold versus silver:

About Gold

XAU/USD, GOLD

In the Forex market, gold is a form of currency. The particularity of gold is that it can only be traded against United States dollars (USD). The internationally accepted code for gold is XAU. It is known to be a “safe-haven” asset, it is expected to increase its value in times of volatility and economic uncertainty. The XAU/USD pair tells the trader how many US Dollar (the quote currency) are needed to purchase one Gold Ounce (the base currency). United States is the country that holds the biggest resources of gold in the world.

HISTORIC HIGHS AND LOWS FOR XAU/USD

  • All-time records: Max: 1920.80 on 06/09/2011 - Min: 35.32 on 27/07/1970
  • Last 12 months: Max: 1350.41 on 10/04/2018 - Min: 1281.91 on 21/05/2018
  • Last 5 years: Max: 1795.80 on 05/10/2012 - Min: 1046.23 on 03/12/2015

ORGANIZATIONS THAT INFLUENCE XAU/USD THE MOST

  • WGC (World Gold Council), the market development organisation for the gold industry whose aim is to stimulate and sustain demand for that commodity.
  • LBMA, London Bullion Market Association, whose members conduct trading in this wholesale over-the-counter market for the trading of gold and silver. It is loosely overseen by the Bank of England. Most of the members are major international banks or bullion dealers and refiners.
  • COMEX (Commodity Exchange Inc.), the primary market for trading metals. The COMEX merged with the New York Mercantile exchange (NYMEX) in 1994 and became the division responsible for metals trading.
  • Zurich Gold Pool founded in 1968 by the largest banks in Switzerland after the collapse of the London Gold Pool.
  • CGSE, the Chinese Gold & Silver Exchange Society (see above the importance of China in terms of gold reserve).

PEOPLE THAT INFLUENCE XAU/USD THE MOST

  • Randall Oliphant, the World Gold Council’s Chairman
  • Steven Mnuchin, US Treasury Secretary
  • Xi Jinping, President of the People's Republic of China and General Secretary of the Communist Party of China

ECONOMIC DATA THAT INFLUENCE XAU/USD THE MOST

The main indicators that traders should watch to understand where gold is standing are:

  • Demand vs Supply for the commodity
  • Struggling markets or context of currency devaluation: gold is known to be a haven for investors in times of economic uncertainty or when any country sees its currency devaluing
  • Practical applications: technology invents, jewellery use, etc

ASSETS THAT INFLUENCE XAU/USD THE MOST

  • Currencies: USD and EUR. Other important group of influent pairs includes: EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD.
  • Commodities: Silver, the other most important precious metal commodity together with Gold.
  • Bonds: Bund (the German word for "bond", a debt security issued by Germany's federal government) and T-Note (Treasury Note, a marketable U.S. government debt security)
  • Indices: Hui (AMEX Gold BUGS), XAU (Philadelphia Gold and Silver Sector Index) and GDM (NYSE Arca Gold Miners Index) The most important stock exchanges are the New York Mercantile Exchange (COMEX), the Chicago Board of Trade, the Euronext/LIFFE, the London Bullion Market, the Tokyo Commodity Exchange, the Bolsa der Mercadorias e Futuros and the Korea Futures Exchange.

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