The volatility of gold quotations
It will not be a problem to find a buyer if you want to sell gold, and, vice versa, a buyer will always find as much gold as needed. Every day is a huge number gold purchases are carried out at the market, due to the high volatility of stock exchange quotations for the metal. Within a single trading session, the price for gold can change at hundreds of points, so buying or selling binary options for gold, a trader can make a lot of money. In addition, gold price is more predictable than, currency rates for example. Traders point out that this asset follows the trend (which is, however, accompanied by high volatility) and shows sensitiveness to the news background.
The main task of the trader is to predict the fluctuations of prices correctly. If you make bargains at random, there is a high probability that you lose the funds on deposit.
There are several methods to forecast the changes in the price for gold, which may be used in parallel, these are: technical analysis and monitoring of macroeconomic indicators. Technical analysis is more or less clear, like any other asset, gold prices are analyzed by using the graph reflecting the fluctuation of quotations, where certain patterns and shapes maybe easily tracked out.
However, the most accurate predictions can be carried out after analyzing macroeconomic indicators, as well as monitoring economy world news.
Some factors having influence on the gold quotations:
1. Demand. The more buyers want to buy gold, the higher the price rises. In addition, gold has long been a reserve asset. When the economy is unstable, investors transfer money into gold to save money from depreciation.
2. Gold production. Gold is a non-renewable resource, therefore, the less the amount of gold is offered, the higher the price for gold is. However, we may face a situation when gold is offered more than consumed. For example, one of the countries (large gold consumers) ceases to make purchases (for example, because of a military conflict or economic instability). As a result, gold gets cheaper, as production remains at the same level, and the companies owning the mines must sell this gold anyway.
3. Degree of economic stability in gold-consuming countries.
Now let’s consider some examples of how the news of business section influence the macroeconomic factors and how to make a profit from them.
For example, major media outlets publish reports that the stock market of a large country subsided significantly. Before this moment a stable rising trend in gold could be observed. Accordingly, some part of the stock market will be converted into gold, so the metal will rise in price. We know already that gold is sensitive to the news and tends to follow the trend, so you can buy binary options.
Consider another example. Reports are published that gold mining is on the verge of profitability at the current price, and the companies plan to cut production. If this trend is vertical we can buy options, because the decline in production is accompanied by the rise of quotations, if the trend falls, we should sell, as the decline in production output can be caused by the decline in demand.
Thus, gold trading through binary options may become a lucrative employment, as it allows to earn no matter if the price rises or falls.