Currency pair gold – XAUUSD

Gold is one of the most attractive exchange instruments for investors. Until recently, gold was considered a quiet investor's tool because it had been actively gaining in price over the years.

However, from the second half of 2012, the instrument began its active downward spiral and turned into one of the most volatile and unpredictable on the Forex currency market. 

XAUUSD consists of two elements, namely gold (XAU) and the dollar (USD) for which this precious metal is purchased.

The XAUUSD currency pair is considered to be one of the most dangerous due to the poor predictability of its movement and very high volatility, which reaches from 2500 to 3000 points per day.

Many professionals have suffered defeats trying to master this asset, because in recent years you will not see the patterned upward movement that all ordinary people are accustomed to.

What are some advisors , which can be freely downloaded without any problems, opening positions only for purchases.

Actually, we bring to the top that the behavior of gold has changed very much and has become similar to the movement of ordinary currency pairs, which are characterized by sideways markets and complete uncertainty. To learn how to work in modern conditions with the XAUUSD currency pair, you need to understand the factors that influence this currency pair.  

What affects the price of gold.

XAU, or the even more accessible and common name gold, is one of the most expensive precious metals, and its mining resource is very limited. It so happens that gold is a guarantor of the stability of any economy, since it is what backs up the cash issued by national banks.

However, if we put aside sentiments about the significance of gold and go directly to the factors that influence gold, we can highlight the following:

1) Gold is a precious metal that is a safe haven for all investors during a crisis.

It so happens that gold is usually called a refuge, so if you observe crisis phenomena among global players, you can safely buy gold, as it will begin to rise in price.

Also, in the short term, gold reacts very strongly to terrorist attacks by global players such as the United States or in European countries, which have become more frequent due to the migration crisis. Therefore, if you see a crisis phenomenon, pay attention to gold.

2) The price of gold directly depends on the volume of production by the main mining countries.
Gold is primarily a metal that has its own birthplaces where its active mining takes place.

If you see in your news reports data about reductions in production volumes by major exporting countries or major large companies, you can safely expect an increase in the price of this metal. Below is a table of mining countries per year in tons of this precious metal:

The second element contained in the currency pair is the US dollar. Since gold is purchased directly for the US dollar, it has a direct impact on the exchange rate of this currency pair. Of the factors that influence gold, three main areas can be distinguished, namely:

1) Macroeconomics

Macroeconomics means the release of important statistics, indicators that reflect the stability of the US economy. Such factors include GDP, trade balance, indicators in the industrial and agricultural sectors, unemployment, data on benefits and much more. Actually, you can observe all these indicators in the economic calendar.

2) Policies and statements of heads of departments

By this category we mean statements by the main officials of the state, namely the president, senators, and the head of the Central Bank. Politics itself and its inherent scandals also do not bypass the dollar.

3) Prices on commodity markets

It is very important to understand that the United States has the most developed industry, so the flow of funds into the budget directly depends on its success. We should not forget that commodity prices are one of the significant factors that affects the US economy; for example, with a strong drop in oil prices, the USD only increased its position.

In conclusion, I would like to note that XAUUSD has always been difficult to predict, but if you track the factors that directly affect the currency pair, trading will turn from guessing on tea leaves to effective trading.