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How To Generate A Fundamental Analysis Idea On Gold Trade

Fundamental Analysis Idea On Gold Trade

Investors typically buy gold to diversify risk, especially by using derivatives and futures contracts. Gold markets, like other markets, are volatile and vulnerable to speculation. Compared with most other precious metals used for investment, gold has emerged among the safest havens of all countries.

Forex trader news is a very prominent trading strategy. It is also the main and unavoidable source of fundamental analysis. In this article, we try to present how to use the forex trader news with a fundamental analysis of the Gold Trade. The gold and silver market is suffering from many fundamental factors, described below.

The money supply is one of the important factors to think about for the elemental analysis of gold markets. funds include safe assets, like cash, coins, and balances held in checking and savings accounts that companies and individuals can use to form payments or hold as short-term investments.

which successively generates more investment and puts extra money within the hands of consumers, thereby stimulating spending. The increased commercial activity raises the demand for labor. the other can occur if the cash supply falls or when its rate of growth declines. (Gold Fundamental)

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What Is Gold Trade?

So far we know gold trading and mining was started first in Egypt in 3000 B.C. Gold is a precious metal. Raw gold is a neutral mineral thing that is produced by mining. Gold is firstly used as jewelry and secondly as a reserve currency. Another purpose is also used for producing electronics goods and in medicine. In the world, Gold has always counted as a valuable asset from ancient ages to till now. Not only then, Gold is the international reserve currency from the ancient age to till now. Eventually, paper money was introduced in the middle age in the world as Gold deposit slips. Before the First World War, the whole world set its currency value as Gold standard. Every central bank in the world stores and deposits Gold as a handsome amount for their reserve currency. Before 1971 the US dollar-pegged with Gold, then we dollar valuation was set as per Gold rate.

Once upon a time the Gold only traded with physical appearance. Like a bar, coin, and jewelry. But after being introduced as speculative and spot market items it becomes easy to trade. Like as, future, option, and exchange-traded fund (ETF).In the foreign exchange market the Gold trades as a pair with a dollar. Gold and Usd traded one against another in a pair, its call, XUA- USD.

Important forex trader news items for Gold fundamental analysis

There are some very common and all times have been happening fundamental items that can make the gold market price movements. We are now wanting to discuss exactly that kind of fundamental item with its related news.

World worse or crisis situation/ war/pandemic/recession 

Gold has a very well-known fundamental identification as a “Safe haven” asset. From an older age to till now Gold has been accepted by every human being as a crisis time security and safety all precious metal or asset. So when would fall in any worldwide crisis like war, economic recession, pandemic, and people lose their faith in paper currency and even a dollar. People in this time get their confidence for future safety upon Gold. And try to buy Gold. For this, in the time of any worldwide crisis period, the Gold demand became so high and gold price got an upward movement. Gold is a safe haven asset, it has been proving again in any world crisis time. It has a great example of the current Covid-19 pandemic situation in the world.

The Covid-19 pandemic world crisis is the best example of Gold safe haven fundamental identification. The covid-19 pandemic first spread out in China at the end of last year2019. Within March this year 2020, it has spread out in Europe and the USA heavily. Several countries of the world have gotten lockdowns. The world’s financial activities have collapsed. Many people have lost their jobs and business is likely to stop. The whole world falls into an economic recession and uncertainty. It is a great historic world crisis and a worse situation. In March fast half this 2020 year, the Gold price was traded at price 1454.00 labels. But when the covid-19 virus attacks seriously upon Europe and the USA the gold price starts to go up and within September the gold price makes a big rally about 700 pips. Gold price boost for a covid-19 pandemic.Because investors lost their faith in any paper currency and asset. They get faith in gold for future uncertainty. And invest upon gold. For this gold price becomes high.

See the picture of Gold price rally from March to September of covid-9 virus heavily attack times-
Fundamental Analysis On Gold Trade

So like the Covid -19 pandemic crisis is an important gold fundamental item and this type of world crisis and the worst situation is the high impact forex trade news. When any news occurs like, War, pandemic, economic recession, a natural disaster which can bring worse situations for the world then you can analyze it for Gold. And you can get an alert for this type of news update. Is the situation Detroit or developing? If the world crisis situation becomes developed then the Gold price can get under pressure. Because investors are shifting their money to other assets or currency. For this, the Gold price can start to fall down. For example, when the declaration comes out about the successful test of the covid-19 virus vaccine then gold prices start falling down. Because world people get great relief.

Us dollar negative news

Gold is fully counter dollar. It has a great negative correlation with the US dollar. Of us dollar strong the Gold is weak. If a dollar is weak the Gold is strong. It is the main fundamental identification or character of gold. Gold traded against the us dollar with a pair. So, when investors lose faith in the us dollar then they sell us against gold and buy gold. This circumstance can arise when any negative news of the US dollar would have happened. Like, U.S. bad economic conditions, Nonfarm payroll(NFP) employment data miss, negative interest rates imposed by a central bank. Any monetary policies which are taken by Federal Reserve Bank (FOMC) can high impact upon Gold price. It is a very important fundamental thing for gold. And this monetary policy of FMOC related any news is high impact news for Gold. If the US central bank FOMC wants to take any decision which is as a losing monetary policy like as. Interest rate cuts, monetary easing policy, stimulation, quantitative easing, etc, all are made Usd weak. Because all this kind of losing monetary policy provides more supply the Us dollar in market and US dollar demand less than supply. So, a weak US dollar means strong gold. And gold demand becomes high. Except this Gold price is always fixed by the US dollar. So, when a dollar rate is lower than it is very chipset to buy gold.

 When you want to do a fundamental analysis upon Gold then you must know all information about us central bank FMOC monetary policy? What are their views and future bias? For this, you need exact news of that. So try to get it always. Us central banks often take tight monetary policy, like interest rate high, tapering, etc. By this tight monetary policy, the US central bank FOMC reduced the supply of the US dollar, then the US dollar more demand than supply, and high demand makes Us dollar price rate high.US dollar price high mean Gold price low.

USA economical condition understanding is one of the most considerable items for gold fundamental analysis. For this analysis, you must know the USA economical data which are published every week in forex trader news providers in an economic calendar. Is that economic data good or bad? Specifically, the Confirm payroll (NFP) employment data is a very important item for observing US economic conditions. If NFP data meet the expectation it’s good for the US dollar and gold becomes weak, if NFP misses, it’s bad for the US economy and gold can become strong. So always look upon us vital economic news for gold trading.USA economic condition is good means our dollar is strong and our economical condition is bad means us dollar weak. A strong us dollar means weak Gold and a weak us dollar means strong Gold.  

Gold supply-demand news

Every market price is driven by supply-demand. Forex market price also moves by this financial factor. Gold market price always bound this supply-demand concept. So, any news related to gold supply-demand increases or decreases you have to care for it for gold fundamental analysis. Like when any central bank wants to buy or sell Gold. Every central bank in the world keeps gold as their reserve with a maximum percentage of their total reserve. When they wanna buy gold for their reserve, then they buy a lot of quantities of gold. And gold demand becomes high and gold price goes up. Oppositely, when any central bank sells its reserve gold then its market gets oversupply and the gold price could fall. As an example, we can mention the Cyprus central bank Gold’s sales history in the year 2013. This Cyprus central bank Gold sale was driving the gold price fall.

As a gold trader, you must keep eye on jewelry demand for gold. Especially the gold jewelry demands of India and China. Except this; you can keep attention to the industrial demand for gold. And also try to know the news of the main gold producing company’s production update.


Another forex trader news you have to care for is gold fundamental analysis, like inflation (specifically in the USA). Because gold is hedging against inflation. In gold trading you also