Hi all, welcome to another installment of the koala forex education articles.
Self learning forex has never been so easy!
And yes indeed! For the longest of time in history, gold has played a very important part in our society, culture and economy.
When does the price of gold go up or down and what does it mean?
1) Gold usually has a inverse correlation with the dollar. Being price in dollars, the weaker the dollar is, the higher the gold price will be. This is normal as since gold has it’s own value, it should rise when the currency it is priced in weakens.
2) Gold is a typical safe haven when times are bad or inflation runs amok. Gold is perceived as being able to stand the test of time and being valuable on it’s own, it is seen as something that will never be worthless.
3) Gold also acts as a reserve currency of countries around the world. While their currencies may drop in value, gold will always be there as a hedge to such scenario.
Therefore when gold prices go high, something may be possibly wrong and investors may be getting some early protection.
Likewise when gold prices are low, it may indicate that things are going well and risk seekers are letting off their golds to seek high yield investments.
Trade safe and trade well 🙂
You may wish to read about oil and it’s role in the economy too.