What Are the Techniques for Trading Gold?

As investors become more eager for a stable investment that can resist inflation, avoid market risks, and other geopolitical factors, gold has become increasingly popular in the past few years.

When it comes to gold investment products, XAU/USD is the most familiar. Compared to the past, the threshold for trading in gold has been greatly lowered, making it easier for investors to add gold to their investment portfolios.

With the COVID-19 pandemic shaking the global economy, foreign governments and funds are investing more funds in gold to prevent losses caused by inflation. To combat the impact of the epidemic on the economy,A series of quantitative easing measures will weaken global currencies, making gold more valuable in comparison.

The reason why gold is precious is mainly because its global supply is relatively fixed, and it does not increase circulation like the government can freely operate printing machines. If you are preparing to invest in gold, please remember the following nine trading techniques.

1. Intraday trading during the New York period

Gold is a market that lasts nearly 24 hours, but typically experiences liquidity peaks during trading hours in New York. Whether to trade during New York trading hours depends on your trading objectives.

The New York trading session is accompanied by high liquidity, which gives the market ample motivation to move towards its goals. However, in trading sessions outside of New York, it is more suitable for some Range trading strategies.

2. Compare previous highs and lows

The most commonly used strategy is to identify buying or selling opportunities between previous highs and lows. For example, traders can open their positions when gold rises and use the previous high as the selling price, and vice versa.

3. Geopolitical analysis

When political or economic uncertainty raises concerns about currency prices, gold often becomes a safe haven for your investment.

4. Use symmetric triangles for analysis

A symmetrical triangle is a simple chart pattern that suggests that prices are consolidating and gaining momentum to break through. The characteristic of a symmetrical triangle is that two trend lines travel at similar slopes, but in opposite directions. As integration occurs, price trends become more tense, creating potential trading opportunities when breaking through.

Some traders use the symmetric triangle model with other technical indicators, such as liquidity or Relative strength index. When other indicators indicate potential price breakthroughs, the symmetric triangle can be further confirmed.

5. Pay attention to the actions of the central bank

When central banks anticipate fluctuations in certain currencies, they tend to purchase gold as a hedge. For example, recently China and Russia have made headlines due to their significant investments in gold, reflecting their concerns about the future prices of major global currencies such as the US dollar and euro.

6. Track actual interest rates

There is a high correlation between gold and real interest rates, with gold prices rising as interest rates decrease and falling as interest rates rise.

7. Moving Average Crossing

Gold prices often fluctuate within a range, causing different moving averages to cross on the chart. Whenever the short-term moving average crosses the long-term moving average, many traders buy. For example, if 20The price point where the daily moving average crosses the 50 day moving average will indicate a buying opportunity.

8. Pay attention to changes in gold production

In the past few years, gold demand has remained strong, but overall mining production has only slightly increased. It is expected that the cost of gold mining will continue to rise in the future, which may continue to support gold prices.

9. Choose a legitimate gold trading platform

The increasing popularity of trading in gold has also led some online trading platforms to see business opportunities, and even some websites are using high yield slogans to attract investors' attention. Investors need to choose legitimate trading platforms to ensure the security of traders' accounts in response to the chaotic online "gold speculation" websites.

【 EBC Platform Risk Reminder and Disclaimer 】: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice.