The price of gold fell at the end of the week, mostly thanks to nervousness about the direction that many world central banks are taking when it comes to interest rates. Gold started out the week at about $1,328 per ounce on July 16th, and finished Friday, July 22nd at about $1,322 per ounce. This certainly isn’t a huge drop, but it is significant when considering that this represents the fact that sentiment toward gold has changed. This was not a steady downward move in the price, but rather one that happened mostly during trading on Friday. Gold had risen to almost $1,340 early in the week, but as central bank moves began to look like they would rely more heavily on cutting interest rates, gold bore the brunt of this worry.
Gold is often used as a hedge against the U.S. dollar, and when the dollar begins to do poorly, or if it is anticipated that it will in the near future, gold often sees rising prices. That’s what we’ve been seeing over the past several weeks as there has been a lot of speculation about what the U.S. Federal Reserve is going to do with interest rates. If they raise rates again like they’ve been planning on since the last raise in December 2015, that would undoubtedly weaken the U.S. dollar. Now, the supposed June hike is a non-reality, and it doesn’t look like it’s going to happen in the next few months, either. That means that the dollar will likely grow stronger during this time, which is exactly what the Fed is hoping will happen so that their inflation goals can be met. Eventually, this means that interest in gold will wane, hence why we are now seeing the drop in price.
As a binary options trader, you have access to trading gold in a way that most people do not. You don’t need to worry about pricey futures contracts, and you don’t need to worry about stockpiling the precious metal safely. You can profit strictly off of price movement. Watching sentiment toward central banks is an easy way to do this, and one that you can quickly evaluate in just a few minutes by looking at a few reputable news sources and blogs. Paying attention to the minutes when they are released by the European Central Bank, the Bank of England, and the Federal Reserve is also smart, as this reveals how those involved in policy making are feeling about interest rates. If a move is getting closer to being made, it will be revealed here. And, of course, always pay attention when announcements are made. These are all very easy things to do, and they can help you to make more educated trades with gold and currency pairs in your daily routine. Look at these broader concepts, and then formulate individual trades based upon the technical indicators that you would typically use.
Gold is a great asset to learn how to trade as a binary option because it is so simple to gauge. Yes, there will always be surprises here and there, but as a general rule, gold is far more steady than most other assets, especially if you focus on mid to long term expiries. It is too stable to be a good 60 second option, but it makes for a great end of day or end of week trade. You might not want it to be the focal point of your binary options portfolio, but it is a good asset to use to bolster up your profit rates on a regular basis, especially when prices are at their most predictable.