How is Forex Market Affected by Gold?

The Forex market is not only a limited investment tool made with exchange rates, but also commodities such as gold. Investments are made in various commodities without the need for physical ownership. When it comes to commodities traded in Forex, the first investment tool that comes to mind is gold. Gold, which is a traditional investment tool and even defined as an “investment to investment”, is a safe investment tool that is not affected by factors such as interest rates and inflation for many investors. For this, investors see gold as a safe haven and adopt it as an alternative investment tool against the dollar.

This type of investment, which was previously made through jewelers, is now widely carried out on the internet in a practical and secure way. When investing in gold in Forex, you are trading in “lots”, as in foreign exchange rates. You can take advantage of the leverage and bidirectional trading feature of the Forex market. Two-way transaction feature! Here is the highlight of this issue…

Forex Market in the Gold-Dollar Relationship

You can think of gold and the US dollar as an inseparable pair. Because the price of gold is indexed to the US dollar. In other words, all events that may have an impact on the dollar, the technical condition of the dollar index, and gold price changes also affect it. The movements of gold and dollar are inversely proportional. As well as the movements of the dollar, gold supply and demand are among the main reasons for price changes. The economic data of the countries that provide the majority of gold production should definitely be researched. The fact that gold is affected by all these may leave a question mark for the forex investor. So, how is forex affected by the movements of gold? Do you remember what we just highlighted? The answer to this question will best explain the bidirectional trading feature of forex.

Profiting from Every Move of Gold

Since Forex is a financial market, it is affected by increasing and decreasing price movements. For this, forex gold investments will gain movement according to the market and positions will be created accordingly. But the following should not be forgotten; Regardless of the direction of the economic data, profits can be made by investing in gold in the forex market. In other words, you can make a profit while the gold price is rising or falling. This situation is called bidirectional processing. For example; In order to evaluate the decrease in gold prices, you have the opportunity to open a transaction in the buying direction and in the selling direction when it rises. Sharp decreases in gold can enable a well-experienced forex trader to make high profits in a short time. Let’s give a hint; Determining the direction and amount of the transaction correctly and placing stop loss / take profit orders at appropriate levels allows you to be successful in this regard.

SEE ALSO; FOREX RISK MANAGEMENT

Share this article

Leave a Reply

Your email address will not be published. Required fields are marked *