Throughout my career in the world of finance, gold has been one of my favorite assets to watch, and for good reason. The commodity is like no other commodity at the moment. With so many factors playing into movement, volatility is high, which creates incredible opportunities. Below, we’ll talk about what causes movement in gold, what it’s doing at the moment and why, and what binary options traders should be watching ahead.
What Causes Movement In The Value Of Gold
Gold is a commodity. So, like any other commodity, gold is at the mercy of the law of supply and demand. This law dictates that when supply is up and demand is down, the price of the commodity must fall. Adversely, when demand is outpacing supply, the price of the commodity must rise. However, as mentioned above, gold is unlike most other commodities.
Gold is also considered to be a safe haven investment. So, there is a new level of complexity involved in determining price movements in the commodity. Ultimately, when economic or market conditions prove to be concerning, investors tend to pull their money out of the market and put it into safe havens like gold. This ultimately leads to gains in demand and price. Adversely, when market and economic conditions are positive, the value of gold tends to fall as investors ditch safe havens and look to the market for higher profits.
Finally, the USD is a major factor in the price of gold. Like many commodities, gold is priced using the USD. Therefore, when the value of the USD rises the price of gold in nations outside of the United States rises as well. This ultimately harms demand and sends the overall value of gold downward. However, when the price of the USD falls, the price of gold in nations outside of the United States falls as well, making gold more accessible and causing gains in demand. This ultimately pushes the price of gold upward.
What’s Going On With Gold Right Now And Why
Gold isn’t having the best of times in the market right now. In fact, over the past two trading sessions, the price of gold has fallen deep into the red. This is happening for good reason. It all stems from the Federal Reserve increasing its interest rate. There are two ways that the added 25 basis points to the rate are sending gold downward…
