The economic, social and political status of gold in the world has provided it with a high liquidity that does not exist in other markets. While many people around the world prefer to buy gold in the form of alloys or jewelry, we see others turning to gold trading through futures and options offering high leverage, which generates a lot of profit at low risks. Today, gold trading depends on CFDs, where you can open a temporary position to buy or sell a specific amount of gold and then determine the profit or loss depending on the change in the value of gold over the duration of the contract.
Gold is a safe haven for investors especially in periods of economic volatility, because it is one of the most important commodities which maintains its value over time. Traders around the world and even big companies are often trading on this precious metal. Thus, gold prices are always high and have a bullish trend and are very rarely negatively affected by economic events, like the other financial sectors. This has made gold one of the most popular and most popular commodities in all local and international markets.
Demand for Gold – The price of gold rises automatically as demand increases, and the amount of gold purchased has doubled over the last four decades. The main reason for this is the value of the financial and social yellow gold in the world, as well as it enters into many industries such as technology, for example.
Relationship with the USD – This relationship is inverse in nature. The lower the value of the dollar, the more investors tend to buy gold as a safe haven and store of value, which helps raise its prices. The decline in the dollar also leads to the appreciation of other currencies, which contributes to the increase in the demand for gold.
Interest rates are the most important factors affecting gold price movements, as the relationship between gold and interest rates set by central banks is inverse. If, for example, the Federal Reserve cuts interest rates, the price of gold will rise.
Global Crisis – After the global financial crisis that hit the markets in 2008, gold has become a worldwide investment tool and a safe haven popular among investors. Gold maintains its value in periods of economic uncertainty and political tensions.
Gold is a safe haven that protects investors’ portfolios from potential disasters. That’s why many investors bought gold during the 2008 financial crisis, and gold prices continued to rise in response to the euro zone crisis. Meanwhile, others sought to protect their investments against any possible US economic collapse due to severe economic uncertainty. However, gold prices have more than doubled in the wake of the global financial crisis, with prices rising from $869 in 2008 to a record $1,895 in September 2011.
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