Recently, I see that more and more traders are starting to switch from Forex to binary options. This is understandable, because it is easier to trade binary options, and profitability, of course, is also higher. In general, I myself gave up Forex in favor of binary options 6 years ago. But since the topic is so relevant now, let's figure out which is better – Forex or binary options, comparing the pros and cons of both types of earnings.Forex and binary options: a brief comparisonGet and sign up: profitabilitySo, let's start our comparison with such an important point as profitability. When trading binary options, the profit ranges from 75 to 95% of the invested investments. In Forex, the profit is unlimited. However, in order to get a high percentage of earnings on Forex, you will have to correctly predict large price fluctuations, whereas only 1 point is enough on binary options. I think there is no need to explain that binary options trading is more profitable in the long run.Read more: What are binary options?Is risk a noble cause? What is the difference between Forex and binary options?The next difference between binary options and forex is the risks themselves. Forex trading involves constant manual work with risks due to the correct placement of orders for opening and closing transactions (stop losses and take profits). On the one hand, this is convenient, since it is always possible to rearrange orders and wait for the very moment when it will be possible to make a profit or breakeven… But on the other hand, as a rule, a Forex trader needs to have an impressive deposit in order to withstand long drawdowns. In addition, the trader is constantly experiencing psychological pressure (whether he closed the deal on time, whether he placed orders correctly, etc.). It is also important to say that traders who do not have large deposits are forced to use the broker's leverage, which multiplies not only the profits received, but also, of course, losses.Binary options brokers relieve traders of psychological responsibility for placing orders. It is enough for a trader to decide on:the size of the bet (as a rule, its size ranges from $5 to $25),the end time of the transaction.Thus, all work with risks consists in trading with a minimum percentage of the deposit. So, in fact, Forex differs from binary options only by a risk management system. It is not enough for a forex trader to open a deal in the right direction, he also needs to calculate how many points the chart will pass and where to put a stop loss / take profit correctly.Read more: What is Forex in simple wordsAnalysis is the mainThe same tools are used for analysis and forecasting in both types of trading: indicators, news, volumes, price patterns, etc. It turns out that, other things being equal, it is easier to do analysis for binary options, since it is enough to correctly predict only the direction of the price. In Forex, in addition to the direction, as I wrote above, you need to determine the approximate number of points in order to correctly place orders to close transactions.Time is moneyThis point can be interpreted in two ways. For someone, it is important how much time trading takes in total, for someone this moment is not fundamental. In any case, it is clear that Forex takes much more time than binary options. After all, you need to constantly work with orders to influence the outcome of the transaction.Number of assetsThe most popular assets on binary options and Forex are currency pairs and precious metals (in particular, EUR/USD and Gold). However, if the choice is limited for a Forex trader, then a binary options trader has alternative options. This:stocks,indexes,futures,the so-called "pairs" (the ratio of shares of one company to shares of another, for example: google/apple).Thus, a larger number of potentially profitable trades will be available to you on binary options.Read more: What is a spread in trading Forex and stocksOnce again about money: commissions and spreadsActually, the difference between Forex and binary options is also the trading conditions themselves. Forex traders must necessarily pay the broker the spread from each open transaction. What is a spread? The spread is the difference between the purchase price of an asset (bid) and the sale price of an asset (ask) (roughly speaking, the same difference can be seen at any currency exchange point). At the same time, traders do not pay any commissions to the binary options broker, either from investments or profits.Lend a shoulder to a friend: leverageA very important point, in my opinion. Applies only to Forex, but nevertheless it is important to pronounce it. The minimum lot (financial contract) on Forex is $100,000. Naturally, an ordinary person cannot start trading with such amounts. In this regard, the Forex broker is ready to provide its clients with leverage. For example, with a deposit of $1,000, the broker is ready to "add" $99,000 to the trader so that he can enter the market. However, the broker will not risk his money, instead he will limit the maximum amount of losses on the account to 1% (the same $ 1000). What does this lead to? To the fact that traders often start trading large lots and quickly lose money.What to choose, forex or binary options?So, binary options or still Forex? My answer to this question will not be objective, because I made my choice a long time ago. For those who have not yet decided, I can give one piece of advice – decide for yourself which type of trading is most suitable for you. It is difficult to predict in advance which method or strategy will bring the greatest profit, but one thing I can say for sure - binary options today provide the lowest entry barriers to the world of trading, making it simple and accessible to everyone. And a large number of binary options brokers allows everyone to find the most convenient platform for themselves. By the way, some brokers have forex simulators built into the platform.Well, I suggest that all novice traders read the article about the main mistakes that beginners make in trading.Read more: Forex or Binary Options? The difference between Binary Options and ...
USD/CAD: Biden's refusal to participate in the elections strengthened the dollarAmid the active strengthening of the US dollar, the USD/CAD currency pair is experiencing growth, approaching the 1.3730 mark.The Canadian dollar did not find support after the recent publication of retail sales data, which showed a decline of 0.8% to 66.1 billion Canadian dollars in May. Sales fell in eight of the nine industries, with a particularly noticeable decline in the food and beverage sector. The base indicator decreased from 1.2% to -1.4%, with a noticeable decrease in income in all major categories, including food (-1.9%) and alcoholic beverages (-3.3%). There was also a decrease in the e-commerce segment by 3.6% to 3.9 billion Canadian dollars, which is 5.9% of total sales, compared with 6.1% previously.The US dollar maintains its position at 104.00 USDX, having successfully recovered from last week's decline. Joe Biden recently announced his refusal to participate in the next presidential election, explaining this decision in the interests of his party and naming Vice President Kamala Harris as his successor. This event increases the chances of the election of Republican candidate Donald Trump, which may lead to expected changes in economic policy and support the US dollar.Resistance levels: 1.3750, 1.3850.Support levels: 1.3700, 1.3600.USD/JPY: trading data did not support the yenDuring the Asian trading session, the USD/JPY exchange rate strengthened, moving away from the supporting range of 161.70–156.00 and stabilizing at 157.12.The Japanese currency was weakened by the latest data on foreign trade: exports increased by 5.4% in June, falling short of the expected 6.4% and significantly inferior to last month's growth of 13.5%. This is the seventh consecutive month of export growth, but it turned out to be the weakest since the end of the previous year. Imports increased by 3.2%, which is significantly lower than the projected 9.3%. Nevertheless, the trade balance remained in surplus at 224.0 billion yen.At the end of last week, the market reacted to the US labor market data. The number of initial applications for unemployment benefits increased to 243.0 thousand, which exceeded both the projected 229.0 thousand and the previous figure of 223.0 thousand. The total number of recipients of state support also increased from 1.847 million to 1.867 million, which reinforces expectations of rate regulation at the September meeting. According to the estimates of the Chicago Mercantile Exchange (CME Group) instrument FedWatch Tool, the probability of this is 94.0%.Support levels: 156.20, 152.90.Resistance levels: 158.30, 160.70.AUD/USD: the rate retreats from the upper limit of the expanding patternIn the context of the strengthening of the US dollar, the Australian dollar/AUD/USD is experiencing a decline, with the current exchange rate of 0.6664.The Australian currency is weakening after the latest reports on the state of the labor market: the unemployment index, taking into account seasonal fluctuations, increased from 4.0% to 4.1%, excluding seasonal factors, it remained at 4.0%. Labor force participation increased slightly from 66.8% to 66.9%, then stabilized at 66.8%. The number of full-time employees decreased by 43.3 thousand to 9.944 million, while the number of part-time employees decreased by 6.8 thousand to 4.461 million. This trend supports a negative mood in the labor market, which prevents the Reserve Bank of Australia (RBA) from taking decisive action. As a result, investors do not expect a reduction in interest rates in the near future, which further puts pressure on the Australian dollar.Resistance levels: 0.6680, 0.6760.Support levels: 0.6650, 0.6580.Gold market analysisGold quotes have again reached the level of 2400.0, but this week the price is influenced by key economic factors.Changes in the policy of the US Federal Reserve System have a significant impact on the price of gold, which may decide to cut rates as early as September, reducing them by 25 basis points. According to the CME Group FedWatch Tool, the probability that the Fed will switch to a more lenient policy at the September 18 meeting already reaches 91.7%. In addition, the recent decision of US President Joe Biden not to participate in the election campaign also helps to strengthen opinion about a possible reduction in interest rates this year, especially in the context of Donald Trump's possible return to power and his plans to reform the national economy.Support levels: 2385.0, 2290.0.Resistance levels: 2420.0, ...
EUR/USD: the exchange rate tends to break out of the downward range of 1.0880–1.0560During the Asian session, the EUR/USD pair shows mixed dynamics, remaining near the level of 1.0850. Neutral macroeconomic data do not allow the euro to significantly strengthen its position.In April, the producer price index in Germany increased by 0.2%, as in the previous month, which was lower than the projected growth of 0.3%. This led to a decrease in the annual rate from -2.9% to -3.3%, against expectations of -3.2%. Such negative dynamics contribute to a further slowdown in consumer inflation, providing the European Central Bank (ECB) with an additional argument for lowering interest rates at the June meeting. The EU data also show diverse results: in March, the volume of construction decreased from 0.38% to 0.10%, while the labor cost index increased from 3.40% to 4.90% in the first quarter. The EU's trade balance increased from 22.8 billion euros to 24.1 billion euros in March.Resistance levels: 1.0885, 1.1010.Support levels: 1.0820, 1.0705.GBP/USD: annual UK inflation slowed to 2.3% in AprilThe GBP/USD pair is showing an upward trend, updating local highs since March 21. Investors are closely watching the UK's April inflation statistics. The consumer price index decreased from 3.2% to 2.3% year-on-year, exceeding expectations of 2.1%, and from 0.6% to 0.3% month-on-month, which also exceeded the forecast of 0.2%. The producer price index, excluding seasonal fluctuations, increased from 0.7% to 1.1%, which is slightly lower than the projected 1.2%. These data may encourage the Bank of England to begin easing monetary policy this summer, as previously mentioned by Ben Broadbent, deputy governor of the regulator, and Hugh Pill, chief economist.Yesterday, investors analyzed the May index of industrial orders from the Confederation of British Industrialists (CBI), which fell from -23.0 to -33.0 points, against expectations of -20.0 points. This was the fastest decline since November, but many manufacturers expect the situation to improve in the summer months, while not predicting a significant price increase. In the near future, the minutes of the next hearing of the inflation report will be published in the UK, which will help to understand the reaction of officials to the latest price data and clarify the prospects for a possible interest rate cut in the coming months. With the opening of the American session, investors' attention will switch to April statistics on sales in the secondary housing market in the United States, where growth is expected from 4.19 million to 4.21 million after a previous decrease of 4.3%.Resistance levels: 1.2734, 1.2771, 1.2810, 1.2850.Support levels: 1.2700, 1.2650, 1.2600, 1.2568.NZD/USD: New Zealand currency shows growth againThe NZD/USD pair is showing active growth, recovering from the "bearish" sentiment prevailing at the beginning of this week: the instrument is testing the level of 0.6125 for an upward breakdown, which is facilitated by the results of the meeting of the Reserve Bank of New Zealand (RBNZ).As expected, the regulator kept the interest rate at 5.50% and positively assessed the effect of the measures already taken to combat high inflation. RBNZ representatives expressed confidence that the current restrictive policy will reduce inflation to the target range of 1.0–3.0% by the end of 2024. The accompanying statement noted that the slowdown in prices in the service sector is slower than expected, so the transition to "dovish" rhetoric is not advisable yet. The pressure on the labor market is gradually easing, which leads to an increase in unemployment and lower wages, which also helps to reduce inflationary risks.Despite the market reaction to the RBNZ meeting, many investors are in a hurry to take profits, closing some long positions, preferring to wait for today's publication of the minutes of the May meeting of the US Federal Reserve. These documents may clarify the prospects for an interest rate cut by the US regulator in the second half of 2024. The current main scenario assumes the beginning of monetary policy easing in September or November, and at least two reductions of 25 basis points each are expected by the end of 2024.Resistance levels: 0.6130, 0.6152, 0.6183, 0.6200.Support levels: 0.6100, 0.6082, 0.6047, 0.6030.Gold market overviewThe price of gold has been steadily growing for the fourth month in a row: on Monday, quotes updated annual highs around 2449.89, but then rolled back, and the current positive dynamics is restrained by comments from US Federal Reserve officials.Investors had hoped that the publication of April inflation data in the United States would prompt the regulator to start lowering interest rates in September, but recent statements by Fed representatives disappointed the market. Economists recognized the decrease in inflationary pressure as a positive factor, but noted that the April data was not enough to correct monetary policy. The chairman of the US Federal Reserve for Supervision, Michael Barra, stressed that the data at the beginning of the year were "disappointing", so there are no grounds for lowering interest rates yet. In the evening, investors are waiting for the publication of the minutes of the last meeting of the US Federal Reserve's Open Market Committee, which may shed light on the prospects for further actions by the regulator and cause serious fluctuations in the market.Resistance levels: 2437.50, 2500.00, 2562.50.Support levels: 2348.00, 2250.00, ...
USD/CAD: National Bank of Canada announced an increase in housing affordabilityThe USD/CAD pair is showing moderate growth, moving away from the local lows reached on April 10 and updated at the end of last week. Currently, the instrument is testing the 1.3635 mark for an upward breakdown, while market participants are waiting for new drivers to appear.Inflation data for April will be published in Canada today. According to preliminary forecasts, the annual consumer price index will decrease from 2.9% to 2.7%, continuing to move towards the regulator's target levels of about 2.0%. On a monthly basis, the indicator is expected to decrease from 0.6% to 0.5%.The National Bank of Canada noted an improvement in the real estate market. Mortgage payment as a percentage of income at the median house price in the first quarter of 2024 decreased by 3.1%, reaching 58.9%, which is the best quarterly performance since 2019. The greatest improvements are observed in Toronto, Vancouver and Victoria due to lower prices per square meter of housing, lower mortgage interest rates and an increase in median incomes. Analysts believe that the current monetary policy of the Bank of Canada, aimed at preserving the cost of borrowing, indicates a possible transition to "dovish" rhetoric, which will support demand for housing.Resistance levels: 1.3650, 1.3675, 1.3700, 1.3730.Support levels: 1.3616, 1.3580, 1.3550, 1.3524.USD/JPY: on the eve of the publication of Japanese trading indicatorsDuring the Asian session, the USD/JPY pair shows a short-term uptrend, returning to the highs recorded on May 1, and is trading around the 156.44 mark.After the recent strengthening last week, the yen weakened again due to the intervention of the Bank of Japan: the volume of interventions was less than at the beginning of the month, and over the past four trading sessions, the exchange rate has almost returned to previous levels. Macroeconomic data also failed to support the Japanese currency: in March, the index of business activity in the services sector fell by 2.4%, although analysts expected an increase of 0.1%. Japan's foreign trade data will be published tomorrow at 01:50 (GMT+2): experts expect exports to increase by 11.1% compared to the previous 7.3%, and imports to grow by 9.0% after a decrease of 4.9% earlier, which will lead to an adjustment of the trade balance to -339.5 billion yen after the previous 366.5 billion yen.Resistance levels: 156.90, 158.50.Support levels: 155.90, 153.60.Gold market overviewThe XAU/USD pair is showing a corrective decline, moving away from the record highs reached at 2450.00. During the Asian session, the instrument is testing the 2415.00 mark for a downward breakdown, in anticipation of the emergence of new market drivers. Investors' attention is focused on tomorrow's minutes of the US Federal Reserve meeting and April inflation statistics from the UK. The consumer price index is expected to decline from 3.2% to 2.1%, approaching the target levels of the Bank of England. If these forecasts are confirmed, the probability of an interest rate cut by the British regulator in June will increase significantly. In addition, the Bank of Canada will also present inflation data, and analysts predict a decrease from 2.9% to 2.7%, which is still significantly higher than the regulator's target level.The growth in demand for gold is supported by concerns about increased geopolitical tensions in the Middle East. The situation worsened after reports of the death of Iranian President Seyid Ibrahim Raisi in a plane crash, which increased uncertainty over a possible change in the country's foreign policy. Additional support for gold is provided by the recovery of economic activity in China, where the authorities announced new measures to stabilize the affected real estate sector. Recall that China is one of the largest importers of gold, and the People's Bank of China is actively increasing its gold and foreign exchange reserves.Resistance levels: 2431.44, 2450.00, 2470.00, 2500.00.Support levels: 2400.00, 2378.39, 2353.79, 2336.50.Oil market overviewDuring the Asian session, the price of WTI Crude Oil continues to develop the downward momentum that began the day before. Quotes declined from the highs reached on May 1, amid the strengthening of the US dollar. Market participants expect an early interest rate cut from the European Central Bank (ECB) and the Bank of England in June. It is also assumed that the US Federal Reserve System (FRS) will take measures to ease monetary policy, but analysts do not predict a transition to a softer exchange rate until September.Investors are looking forward to the OPEC+ meeting, which will be held on June 1. Analysts believe that representatives of the cartel will discuss the extension of current restrictions on oil production for the second half of the year, which can support price stability in the face of a weak recovery in global demand. In addition, the oil market is under the influence of political uncertainty in Iran after the deaths of President Syed Ibrahim Raisi and Foreign Minister Hossein Amir Abdollahian in a helicopter crash in East Azerbaijan province. Iran is actively increasing its hydrocarbon production, ranking third in terms of volume among OPEC members, and its main buyer is China. Despite the political changes in Iran, experts are confident that this will not lead to significant changes in the oil market. The premium for geopolitical risk is now tending to zero, compared with $12 per barrel in October and $2 in April, when there were mutual attacks between Iran and Israel.Resistance levels: 79.07, 80.00, 81.00, 82.00.Support levels: 78.00, 77.00, 76.00, ...
NZD/USD: the pair checks the 0.6600 level for a possible declineThe NZD/USD pair is showing mixed dynamics, holding near the 0.6000 level and trying to strengthen the "bearish" trend that emerged at the end of last week. At this stage, investors are being cautious, refraining from opening new positions until the publication of US inflation data, which is expected on Wednesday. It is predicted that core inflation for April may show a decrease to 3.6% per annum from the previous 3.8% and to 0.3% monthly from 0.4%. Retail sales statistics will also be released, which is important for assessing domestic consumption, which is a key element of inflation risks. Total sales are expected to fall from 0.7% to 0.4%, while the figure excluding cars will decrease from 1.1% to 0.2%.Earlier this week, support for the NZD/USD pair came from recently released data. The index of business activity in the manufacturing sector of New Zealand showed an increase in April, increasing from 46.8 to 48.9 points. Although successive interest rate increases since October 2021 have led to a slowdown in economic activity, price pressures are likely to remain stable due to high levels of migration, which exceeded forecasts by the Reserve Bank of New Zealand (RBNZ). Also, data from China released over the weekend showed an acceleration in the consumer price index in April from 0.1% to 0.3% year-on-year and an improvement from -1.0% to 0.1% month-on-month. Although the producer price index remained in negative territory, its decline slowed from -2.8% to -2.5%. Additionally, investors' attention was drawn to a slight decrease in the index of activity in the service sector from Business NZ in April from 47.2 to 47.1 points. RBNZ's inflation expectations for the second quarter were adjusted from 2.5% to 2.33%, which may contribute to RBNZ's softer monetary policy in the near future.Resistance levels: 0.6030, 0.6047, 0.6082, 0.6100.Support levels: 0.6000, 0.5975, 0.5950, 0.5920.USD/CAD: the expectation of sideways dynamics in the near futureIn the Asian trading session, the USD/CAD pair is actively testing the 1.3680 level, aiming to overcome it upwards. Meanwhile, market activity remains at a moderate level, as participants from the United States expect new catalysts for price changes during the week.On the other hand, Canadian traders are carefully studying employment data: April figures indicate an increase in the number of employed by 90.4 thousand, which significantly exceeds the previous value of -2.2 thousand and analysts' expectations of 18.0 thousand. The average hourly wage in the country decreased from 5.0% to 4.8%, while the unemployment rate remained at 6.1%, despite forecasts of its increase to 6.2%.Resistance levels: 1.3700, 1.3730, 1.3762, 1.3800.Support levels: 1.3650, 1.3616, 1.3580, 1.3550.Gold market analysisThe XAU/USD pair is experiencing a correction, retreating from the peak values on April 22, which were updated last week. Currently, gold is trying to overcome the support level of $ 2350.00 in anticipation of new factors that may affect the price movement.The gold market continues its upward trend, despite a decrease in net speculative positions, according to the latest report from the U.S. Commodity Futures Trading Commission (CFTC). Over the past week, the volume of net speculative positions decreased to 199.6 thousand from 204.2 thousand, reflecting a decrease in investor activity in anticipation of new catalysts in the market. The positions of the bulls, backed by real assets, amounted to 189,194 thousand against 26,062 thousand for the bears. Sellers increased their positions by 1,028 thousand, while buyers reduced them by 2,979 thousand amid expectations of new movements in gold.Resistance levels: 2378.39, 2400.00, 2431.44, 2450.00.Support levels: 2353.79, 2336.50, 2320.00, 2300.00.Oil market overviewBrent Crude Oil prices are experiencing a correction, holding above the $82.00 mark. The easing of geopolitical tensions in the Middle East is affecting the situation: Hamas representatives have expressed readiness for a ceasefire, and the Houthis have reduced the number of attacks on ships in the Red Sea.Meanwhile, Iraqi Oil Minister Hayyan Abdul Ghani announced the country's intention to withdraw from the OPEC+ agreement on production cuts, which caused a violent reaction. However, the next day, his deputy, Basim Mohammed Khudair, clarified that the problem lies in the difficulty of meeting the current limits, which have a negative impact on the Iraqi economy. The question of Iraq's position on the future OPEC+ agreement remains open, but it is already clear that many participants are ready to increase production, which may have an impact on the market.Resistance levels: 83.20, 86.10.Support levels: 81.50, ...
The year 2022 on world markets will largely be determined by the tightening of monetary policy in the United States, and the first week of the new year confirmed this. The minutes of the Fed's December meeting published last week showed a significant tightening of the position of the regulator's representatives – Fed members believe that the rate can be raised as early as March, and also see a faster reduction in the balance sheet as appropriate. Representatives of the regulator believe that the current economic conditions are already in many ways conducive to tightening the labor market, some even noted the recovery of the labor market already sufficient for such actions, although the majority still expects further improvement in the labor situation. Against this background, it is worth noting the publication of December labor data in the United States, which came out ambiguous. On the one hand, employment in December increased by only 200 thousand. The Bloomberg consensus forecast assumed an employment growth of 450 thousand, and the actual growth rate of the indicator was the lowest since the beginning of 2021. Nevertheless, in many respects such weak employment growth is explained by seasonal adjustment, and the unemployment rate in December fell more than expected. Thus, the indicator has updated the next lows since the beginning of the pandemic, dropping to 3.90% against the expected 4.10%. The unemployment rate continues to approach a historic low of 3.40%, and labor statistics have further increased fears in the market of an imminent tightening of the PREP in the United States. As a result, on Friday, the yields of ten-year US treasuries at the moment exceeded 1.80% per annum - the maximum since the beginning of the pandemic. Today they have returned to these levels again.This week, the dynamics in the market will continue to be determined by expectations for the actions of regulators - investors will follow the statements of representatives of the Fed and the ECB, as well as the publication of price data in the United States for December. Statistics published last week showed an increase in inflation in the EU to 5.00% YoY. As a result, the topics of price growth in December updated the historical maximum, while analysts expected a slight slowdown in price growth. The situation on the supply side also has high inflation in the United States. The December business activity indices indicated a slight easing of logistical problems, however, the further deterioration of the epidemiological situation again intensified disruptions in logistics chains, which does not lead to a significant slowdown in price growth. The FAO World Food Price index fell in December for the first time since July, but food inflation remains at elevated levels. Against this background, US inflation data is likely to continue to bring the Fed rate hike closer, intensifying the negative in the markets.The main event for the oil market in early 2022 was the OPEC+ meeting. However, as expected, it was decided to stick to the current plan to increase production. Nevertheless, the cartel lowered its forecasts for a surplus in the oil market, which allowed Brent crude futures to exceed the level of $80/bbl. Moreover, against the background of interruptions in the supply of black gold from Kazakhstan and Libya, quotations were close to $83/bbl. However, at the end of the week they declined from these levels, today Brent futures are growing by 0.35% and are trading around $82.05/bbl. The main negative for oil this week may be related to the potential strengthening of the dollar amid expectations of a tightening of the PREP in the United States. However, in the absence of a significant strengthening of the dollar, Brent futures may still exceed the levels of $83/bbl– - the quotes may be supported by another weekly decline in oil ...
Experts of the largest US bank Citigroup reported that, according to their estimates, gold in 2023 will cost about $1,500 per troy ounce. They also assumed that the average price of this precious metal in the coming year will be close to $1,685. However, analysts of the American bank expect an increase in the value of gold in this winter period to a range from $1,825 to $1,850 per ounce. However, in the future, the value of gold will begin to decline. Citigroup is 60% confident in this forecast for the next two years, while there is another version of their forecast, in which experts are 30% confident. And this option provides for an increase in gold prices to $2,100 in the middle of 2022, which can be realized subject to a significant increase in private and public debt. During trading on Tuesday, December 14, gold declined in price by 0.01% to $1,788.15 per ounce. The value of silver decreased by 0.16%, amounting to ...
At the height of the 2020 crisis caused by COVID-19, the price of gold soared to a record $2,073 per ounceAt that time, some experts predicted a further increase in gold to $2300-2500 per ounce, as bidders sought to protect their capital from a sharp market collapse and growing uncertainty.But in the fall of 2020, the market situation changed dramatically. Active vaccination of the population against COVID-19, gradual adaptation to new working conditions and the subsequent recovery of the world economy have significantly weakened interest in gold and other protective assets.In 2021, the news background for gold remains mostly negative. The main attention of the market was focused on the further actions of the Fed. Large-scale measures to stimulate the economy have significantly increased inflationary risks, due to which the profitability of long-term American treasuries has increased sharply. From January to March 2021, the yield on 10-year government bonds rose from 0.95 to 1.70%. Over the same period of time, the dollar index strengthened by about 4.5%. Gold has lost its investment attractiveness, as the strong dollar has made the precious metal more expensive and active against the background of the increased guaranteed yield of American debt securities.Read more: What is the US Dollar Index DXY and how to trade it?From April to May, the pressure on the precious metal eased somewhat. In just two months, gold quotes showed an impressive growth of more than 13.5%, but, as subsequent events showed, it was the death agony of the bulls, who obviously lost their strategic initiative.The market is growing expectations that the world's leading central banks, primarily the Federal Reserve, will begin to gradually curtail incentives, which will help strengthen the dollar and limit inflation risks. It is obvious that in these conditions, the potential for a recovery in the value of gold will be very limited.Of course, the continuing risks of the emergence of new COVID-19 strains and local pullbacks on stock markets can lead to a short-term increase in the value of gold. But a return to the highs of mid-2020 in the medium term is hardly worth counting on. Although the volatility of gold will remain very high and gold will still be the most popular instrument for trading.Despite the slower than previously expected pace of recovery of the labor market in the United States, representatives of the Fed are increasingly making statements about the need to curtail incentives. The latest comments from the Fed representatives suggest that the regulator may begin the process of reducing stimulus measures this year, which may support the US dollar. Gold, which has a close inverse correlation with the dollar, will obviously be under pressure.The hopes that the demand for precious metals will be supported by high inflation risks are not yet confirmed by the real situation on the market. Since the beginning of the year, inflation in the US, the EU and other regions has risen to multi-year highs, while the price of gold has declined since the beginning of the year. Therefore, the statement that when inflation increases, investors always buy gold is fundamentally wrong. Traders will be happy to buy stocks, bonds and other high-yield assets if they are sure that they will protect them from risk better than precious metals.Read more: Causes of inflation and scientific approaches to their studyWhat is the forecast given by the world banksSociete Generale experts note that locally the market remains bullish amid the weakening of the dollar, but in the future gold may come under pressure. According to the baseline scenario, the average price of gold in 2022 will be $1,750 per ounce. An increase in gold prices is possible only in the event of the beginning of another crisis in the world economy. In this case, the price of gold may rise to the level of $2,160. The third scenario assumes an acceleration of the global economic recovery, which may significantly weaken interest in gold and other protective assets. In this case, the price of gold may fall to the level of $1,600.Analysts also predict a decline in gold prices. They believe that the precious metal will remain under pressure in the coming months, as macroeconomic statistics from the United States will indicate a further economic recovery. The risks associated with the new COVID-19 "Delta" strain may deter the Federal Reserve from earlier curtailing incentives, but gold is unlikely to extract large dividends from this.Bank traders believe that the fair price range for gold is $1735-1845. Now the price is in the middle of this range and the further short-term vector of movement will depend, first of all, on the rhetoric of the Fed. Tougher statements may provoke a new wave of sales.Read more: The history of Federal Reserve (Fed) and its functionsWhat does technical analysis sayOn the weekly chart, we note a false breakdown of the previous historical maximum. The subsequent pullback of the price down indicates the formation of a strong reversal formation, within which we can see a price decline to the area of 1500.00. For this, the bears need to push through support at the level of 1690.00.Therefore, as long as the price remains below the 1900.00 mark, the prospects for a long-term movement of gold remain bearish.XAUUSD, 1WOn the daily chart, the picture for the bulls is also not comforting. The price is currently under a strong resistance level of 1835.00. The probability that the bulls will be able to break through this level from the first approach is very insignificant. But even if buyers are able to break through this mark in the future, the growth potential will be limited by the next strong resistance at 1900.00.Read more: What timeframe is it best to trade onThe base scenario assumes the development of a moderate downward movement in the direction of support at 1685.00. At the same time, in the range of 1685.00–1835.00, the price can be held for quite a long time.XAUUSD, DailyThe medium-term scenario of price movement also indicates the development of a downward movement. On H4, buyers are still unable to cope with the resistance even at the level of 1800.00. Therefore, while the price is kept below this mark, the bearish scenario of movement with a target of 1732.00 remains a priority.XAUUSD, 4HYou can count on the growth of quotations only after the price is fixed above 1800.00. In this case, the potential for the development of an ascending wave will be limited to the level of 1835.00Read more: How to trade on the Forex ...