Don’t waste your time – keep track of how NFP affects the US dollar!

Data Collection Notice

We maintain a record of your data to run this website. By clicking the button, you agree to our Privacy Policy.

facebook logo with graphic

Join Us on Facebook

Stay on top of company updates, trading news, and so much more!

Thanks, I already follow your page!
forex book graphic

Beginner Forex Book

Your ultimate guide through the world of trading.

Get Forex Book

Check Your Inbox!

In our email, you will find the Forex 101 book. Just tap the button to get it!

FBS Mobile Personal Area

market's logo FREE - On the App Store

Get

Risk warning: ᏟᖴᎠs are complex instruments and come with a high risk of losing money rapidly due to leverage.

76.5% of retail investor accounts lose money when trading ᏟᖴᎠs with this provider.

You should consider whether you understand how ᏟᖴᎠs work and whether you can afford to take the high risk of losing your money.

Gold trading strategies

Gold trading strategies

2020-09-15 • Updated

Information is not investment advice

The gold trading is not a very easy topic, as the yellow metal does not move the same way as the other commodities or the currency pairs on the Forex market. However, there are some well-known strategies which can be used to succeed in gold trading.

News trading

Besides the usual statistics, gold is affected by political and economic factors, global disasters, terrorist attacks, and crises. The reason is that gold has tight connections with different markets: equity or raw materials.

The dynamics of gold prices do not follow the usual logic. Trading on the news can be successful only after the major releases or events. It is highly recommended not to open the position immediately after the event, because you do not know where the price will go.  For example, the sharp fall in the equity market results in the rise of the gold price. As a result, you can make long positions.

Fundamental trading strategy: correlations

 It’s not a secret gold has a strong negative correlation with the US dollar. That means, gold and the US dollar move in the opposite direction. The buy signal for gold means the sell signal for the USD and vice versa. A good thing to know is that one of the forms ahead of the other one and you can take a chance to make a profit.

 Here is the strategy to trade the Gold using its correlation with the USD.

  1. At first, open gold’s price chart and the USD cross currency pair (for example, USD/JPY) on your platform at the same time. Both of the charts are needed to be set at the same timeframe (for example, H1).
  2. Secondly, determine the key support and resistance levels on both of the charts and wait for the breakouts. In addition, take a look at the forms of the candlestick to find out the potential further direction of the price.

 Take a note, that sometimes you can find a resistance line on the USD/JPY chart, but cannot determine any visible support on the gold chart. However, the breakout of the resistance on USD/JPY chart will be followed by a sell signal on the Gold chart. Therefore, if the USD is strong on USD/JPY, it will signal to sell the gold.

a resistance line on the USD/JPY chart

a sell signal on the Gold chart

On the H1 chart of USD/JPY, a bearish candlestick was formed. It gave a strong signal to buy gold. If a trader takes this opportunity, he can make a good profit on the rising price of gold.

On the other hand, gold has a positive correlation with AUD/USD. Australia is known as one of the largest gold producers in the world. That is why the Reserve bank of Australia should keep its gold reserves in balance.  The gold reacts to Australian fundamental data or monetary policy changes made by the Reserve bank of Australia. On the picture below, the interest rate cuts made in 2016 resulted in the selling of the gold.

XAUUSD daily chart

Seasonal trading strategy

seasonal trading strategy

The price movements of gold are correlated with its seasonal pattern. Gold can be stronger during certain times of the year and weaker during the other times.  Moreover, these periods repeat themselves during the same parts of the year.  Gold tends to go up in the first quarter of the year as well as during the last months of the year.

  • The first step is to buy gold in the months when Gold price tends to increase. It tends to happen at the beginning of the year (in January and February).
  • Wait for the other confirmations, based on technical figures, oscillators (MACD, RSI) and forms of candlesticks for the potential reversal.
  • If the gold is following its seasonal pattern in January, make a long position.
  • Take profits before the end of February. Remember, if gold has followed its seasonal pattern in first months, the seasonal cycle will likely to continue. According to the seasonal pattern, March is the worst month for trading gold, so it is better to close your position before it.

Tip: the spot price for gold displayed in the charts is set around 10:30 and 15:00 GMT after different auctions made by the major players in the gold industry. Most of the traders open or close their position during this period. That is why it is recommended to trade gold within these time limits.

Conclusion:

The specific nature of gold asks for the special trading techniques to be used. You can use either the correlation strategy or the strategy of seasonal changes. But remember to take into account all of the factors, which can potentially influence gold. This will prevent you from risks and make your trading more profitable.

Similar

Pin Bar Trading Strategy

Sometimes a chart or a candlestick pattern may provide a decent entry signal if it is located at a certain level. A pin bar is one of the most reliable and famous candlestick patterns, and when traders see it on the chart, they expect the price to change its direction soon.

Japanese Candlesticks: a Complete Newbies’ Guide

Have you ever wondered how many wonderful tools did Japanese people invent? QR codes, car navigation, instant noodles, and sushi are just some of the Japanese things we can't imagine our life without.

Money Flow Index Trading Strategies

Among hundreds of different indicators and technical tools for traders, the relative strength index (RSI) is one of the most popular due to its simplicity and, at the same time, its power in various trading cases. In this article, we want to tell you about another powerful tool similar to RSI but with some cool tweaks.

Choose your payment system

Feel the Team Spirit

Callback

Please fill in the form below so we can contact you

Select the best time for us to call you. We give calls from Monday to Friday in suggested intervals. In case we couldn't get through, we will try again at the same time the next day. For getting real-time assistance, use FBS chat.

We provide only English-speaking callbacks. If you prefer any other languages, contact the support team.

We will call you at the time interval that you chose

Change number

Your request is accepted.

We will call you at the time interval that you chose

Next callback request for this phone number will be available in 00:30:00

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later