Tips for Trading Gold (XAU/USD)

As the COVID-19 pandemic shakes the global economy, foreign governments and savvy forex traders are moving more of their money into gold as a safeguard against losses resulting from inflation. Economic practices such as printing more money can weaken global currencies, depreciating their value in relation to stable assets such as gold.

XAU/USD is one of a number of gold pairings forex brokers now offer, making it easier than ever to incorporate gold as part of your forex trading strategy. The stability of gold prices over time also makes it an important asset during inflationary periods such as the one we’re seeing today. Here are trading tips to keep in mind :

  1. Day-Trade with the New York Close in Mind

Gold is a nearly 24-hour market, but peak liquidity is typically found during New York trading hours. Whether you should target trades during or after New York trading hours depends on your goals.

  1. Simplify Analysis by Targeting Previous Highs and Lows

Because XAU/USD tends to trade in a range, one of the easiest strategies is to identify buy or sell opportunities within previous highs and lows for the trading pair. Traders can open a position on gold when it’s trending up, for example, and target a previous high as their sell price, or vice versa.

  1. Consider Geopolitical Implications on Currencies

When political or economic uncertainty creates concerns about currency prices, gold can be a stable safe haven that protects your liquid assets.

  1. Use the Symmetrical Triangle for Analysis

The symmetrical triangle is a simple chart pattern that indicates a period of consolidation that may lead to a price breakout. Symmetrical triangles feature the convergence of two trend lines progressing at a similar slope, but in opposite directions. As consolidation takes place, price movement on the pairing grows tighter, creating a potential trading opportunity on a breakout.

  1. Track Industrial, Commercial Demand for Gold

Increased market demand for gold can affect prices due to the fixed global supply of the material. Demand can come in multiple forms. Certain industries may increase their acquisitions of gold due to the material’s role in consumer projects. Both the medical and tech industries, for example, use gold in certain products and solutions.

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