Pepperstone: Dissecting a few issues to look out f
  Source:Pepperstone 2023-05-24 11:32:29
Description:
The international gold price recently broke through the $2,000 mark and is close to the all-time high of $2,089 per ounce. Against the backdrop of a slowdown in the pace of interest rate hikes in the United States, the rise in gold prices has attracted many eager investors. This article analyzes several issues that you need to pay attention to in gold investment, so that it becomes your best dishHow to buy gold?Buying physical gold directly as an investment hedge is not a rational choice, because when it is sold, it becomes used and has to be discounted. And gold jewelry must be regularly maintained to avoid oxidation. And the price of gold commemorative coins often deviates from the price of physical gold. With the acceleration of innovation in financial products, people now have easier access to gold-related investment products. Such products include gold funds, exchange traded funds, shares of gold companies, as well as gold futures and contracts for difference. Whether to invest in gold and how to invest in gold should be combined with the level of personal financial strength. It is not that something rises in the news to invest, it is a move to follow the trend, which may make you regret it.What is related to the rise and fall of gold1) Short-term market sentiment eventsGold is often seen as a hedge against a recession in the economic world or geopolitical uncertainty. When unexpected events cause market panic, volatility of various financial assets increases, and gold tends to rise short-term. When optimism sweeps through financial markets, risk events are forgotten or the dust settles, implied volatility falls, credit spreads narrow, and stock, oil, and bond yields rise, we tend to see gold become less attractive to own, with traders looking to short gold and profit from falling prices.2) Long-term gold valuations are based on Fed real interest rates or Treasury yieldsTraders with a long-term focus on fundamentals may look at gold's correlation with other markets to better understand the drivers and investment appeal at the time. Gold tends to rise when U.S. government bond yields fall, usually because inflation expectations and economic data are deteriorating. When we visually overlay US Treasury yields and gold prices, we see that these variables are closely negatively correlatedWhen global bond yields fall to incredibly low levels or in many cases further into negative territory, people buy gold as a hedge against a world of diminishing returns. Also, gold is expected to continue to move upward when the Fed rate hike comes to an end and monetary policy shifts to a loose marginConversely, if the world economy is improving and U.S. and global bond yields are rising, then the opportunity cost of holding gold is re-examined and gold tends to face headwindsOne more simple trick: If the attractiveness of holding currencies such as the US dollar, euro, British pound, Japanese yen and Australian dollar is waning, when gold is rising in any currency, it often means that traders see gold itself as an alternative currency environment, which is gold's "bull moment."What are the characteristics of the international gold market1) No difference in risk managementFrom the perspective of international futures, gold is in many ways no different from any other variety, and there are still a range of investment factors to consider. For example, reasons to buy or sell, timing to achieve the best execution, controlling the right position size through risk, and skillfully managing open positions.2) Gold is more continuousSome trading gold is not interested in fundamental drivers, using pattern recognition, support and resistance, volatility indicators, or purely technical analysis to find opportunities. The fact that gold can be traded 23 hours a day, 5 days a week reduces the likelihood of short jumps, further increasing the appeal of gold3) Intraday fluctuations are characteristicOn international markets, three trading sessions per day (Asia, Europe and USA). In the chart below, we have marked each session as a shaded area (purple - Asia, green - Europe, orange - US) representing the high to low of the trading range for that session. Using this sample, it is clear that gold has been in choppy territory throughout Asia, so this may not be suitable for traders whose strategies are most effective in higher volatility. Gold is very active during the European and US time periods, as most influential primary data releases or influential central bank governors speak during this period.How to see gold trendPepperstone supports gold denominated in US dollars, Japanese yen, Australian dollars, euros and British pounds. You can select Pepperstone as a data source in TradingView for easy access to gold trends.Of course, you can also click on attention and collection, pay attention to the future when the big changes in gold, our first analysis