How To Profit More From Trading Gold: Insider Tips You Should Know

Geopolitical events

Geopolitical conditions between countries, especially those related to countries with large gold reserves, will also have an effect on the movement of gold. Tensions or unfavourable conditions between these countries will cause the market to shift to investments in risk-off assets. In such cases, safe-haven assets will always be an option.

Natural disasters

Natural disasters may also be one of the factors that boost demand for gold since these large-scale occurrences generally affect government policies. In large countries hit by natural disasters, especially, investors might exercise caution and have diminished trust in the economy, and thus, might channel their funds into gold.

Immediate actions to take to increase your profitability based on correlations

1. Focus on Central Bank events

If the sentiment for USD is not supported by Federal Reserve policies, then be prepared to BUY GOLD. If the sentiments towards USD are negative due to central bank policies, then look to SELL GOLD.

2. Pay attention to geopolitical tensions

BUY GOLD is an option if the conflict between major countries continues to escalate or draw out. Meanwhile, going short on gold (i.e. SELL GOLD) is an option when the tensions subside.

3. Be mindful of risk sentiment

Risk sentiment refers to how the financial market participants (mainly traders and investors) are feeling and behaving. In layman terms, we can think of it as the mood of the overall financial market.

There are two sides to risk sentiment: risk-on or risk-off. In a risk-on period, the market takes on more risk by selling safe-haven assets (such as gold and bonds) and moves to riskier assets like stocks. On the other hand, in a risk-off period, the market starts selling riskier assets and seeks safe havens for protection.

Once we can identify the risk sentiment of the market, we can increase the chances of going in the correct direction when buying or selling gold.

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Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. ...

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