Making a profit from financial instruments in the short, medium or long term is the main goal of any investor. Beginners prefer to use stocks and bonds, and we are usually talking about the direct purchase/sale of assets.But experienced traders often work with derivatives, the type of which is chosen based on the goals and skills of the investor. With the right approach, they allow you to make good money, with an inept one, serious monetary losses are likely.What are derivatives?Types of derivativesFuturesForwardOptionSwapFunctions of derivativesHow and where to trade derivativesChoosing a broker and opening a trading accountChoosing a derivativeAnalysis of the market situationPurchase of a contractWhat are derivatives?A derivative (derivative financial instruments) is a type of contractual contract that obliges the transaction partners to perform certain actions with the underlying asset in the future. Most often, this is the delivery of goods to a specific date at a given price on terms that do not depend on price fluctuations in the markets.The conditions prescribed in the derivatives contracts are called the specification. Holders have the right to sell the acquired derivatives, and their issuers are not always the owners of the underlying assets.Read more: Issuer of securities: definition, types and featuresDerivatives do not exist by themselves. These are derivative financial instruments that are inextricably linked to the value of the underlying assets, and there may be more than one of them.At the same time, the following can act as a base:Securities (Shares, ADRs, GDRs, etc.);Currencies (EUR/USD, GBP/USD, etc);Stock indexes (S&P500, Dow, NASDAQ, FTSE100, etc.);Commodities (metals, energy carriers, agricultural products, etc.);Macroeconomic and statistical indicators (key refinancing rate, inflation, weather, etc.).The derivatives futures market operates on the same principles as the securities and commodity exchanges. Pricing in this industry follows similar principles. At the same time, the total number of contracts presented on the market and the number of underlying assets are often not related in any way.Derivatives are a rapidly developing sector of today's financial system. According to the most conservative estimates, the volume of this market is $845 trillion. (the volume of world GDP is $86.6 trillion). A number of experts claim that the volume of the derivatives market reaches $2 quadrn.The first analogues of modern derivatives originated among Babylonian merchants. In Japan in the 17th century, rice coupons became widespread, and in the UK and Holland — options for flower bulbs. The first modern derivatives were launched on the London Stock Exchange in the 1860s. And they were actively distributed in the 20s of the XX century.Types of derivativesAll derivatives (derivative financial instruments) are divided into those that are traded freely (contracts of a standardized type on exchange platforms), and contractual (agreements in the OTC sector). Let's look at the most popular types of them.Read more: What is OTC and what are its featuresFuturesFutures contracts imply delivery on a specific date of the selected underlying asset at a given price. In fact, this is a contract of sale with deferred execution. There are futures:Settlement - without the physical movement of the goods or the change of the owner of the securities, the monetary settlement takes place on the day of the expiration date;Delivery - the goods are shipped directly within the specified time.Example: by buying oil futures, you can count on the delivery of the number of barrels specified in the specification by the deadline specified in the contract. But when buying index futures, only monetary settlement is possible, there is no physical commodity.Read more: What are futures: types, features, advantages and risksForwardForward contracts are concluded in the over-the-counter sector. They imply the delivery of the underlying asset at a given price by a specific date. Unlike standardized futures, they allow you to set additional conditions (quality, packaging, etc.), that is, there is still an opportunity for business maneuvers.Example: a large industrial production requires rolled metal after 5 months. According to analysts' forecasts, rental prices are expected to rise in the near future. At the moment, there are no free funds, as well as the desire to bear increased storage costs. The buyer and the supplier conclude a contract at the current price with the supply of products in the future with the payment of warranty security.Read more: Bulls and bears, as well as other animals on the stock exchangeAn example of a forward at the household level is drawing up a contract for the purchase and sale of an apartment in a house under construction or a car in a car dealership (if it is not in stock).OptionThe purchase of an option gives the right to buy or sell an asset in a given time period at a specified price. The first option is called call, the second-put. It is not necessary to execute the contract if the conditions are unfavorable for the owner (the projected price of the asset has gone in the wrong direction). It is acceptable to simply fix a loss in the amount of the option value.Example: on the stock exchange, a company's share is traded at a price of 50 dollars. The trader, having analyzed the market situation, revealed the probability of growth up to 65 dollars. He acquires a call option with the right to purchase a security at 50 dollars. with a guaranteed security of 10% (5 dollars.). When the desired price is reached within the specified period, the trader executes the option. And sells a share on the stock market already at the market price. If the forecast is not justified, it is permissible to resell the option cheaper or not to execute it, fixing a loss of 5 dollars.SwapA complex version of a futures contract, works on the principle of "2 in 1". A transaction is concluded for the purchase or sale of an asset with the simultaneous opening of a counter-directional transaction with the same asset on similar terms, but after a certain period. The main goals of using swaps are to increase the number of assets and reduce risks (hedging). The most common types of swaps are currency, commodity, credit, interest, stocks and precious metals.Read more: Swaps in the financial market. What are they and what are they given to the traderIn addition to these types of derivatives, there are other, less popular types — warrants, PCI, FRA, depositary receipts. There are also derivatives for derivatives, but investors are wary of such an instrument.Functions of derivativesDerivatives are acquired not only in order to become the owner of the underlying asset. Their functions are more diverse:Risk hedging (protection against sharp price and exchange rate fluctuations);Price arbitrage (conclusion of multidirectional transactions in several markets in order to make a profit);Tax optimization, for example, when using a stock swap, you will not have to pay a tax related to capital gains;Speculation on the price fluctuations of an asset;Reducing transaction costs;Expansion of earning opportunities through increased leverage (X100).Read more: Leverage on the stock marketHow and where to trade derivativesHow to trade derivatives:Choosing a broker.Opening a trading account and depositing funds.Choosing the type of derivative.Market analysis.Purchase of a contract.Working with futures contracts and options is similar. But there is one serious difference. Futures obliges to fulfill the conditions regardless of how the market situation develops for the owner. The option leaves the right to choose.As for the places where you can trade derivatives, ordinary investors are mainly available on exchanges where less than 20% of this type of assets are traded. Options and futures contracts are presented in the futures sections of these platforms.There are 64 exchanges working with futures in the world. One of the largest is the Chicago Mercantile Exchange CME (commodities and cryptocurrency).Among the cryptocurrency exchanges working with futures contracts, OKEx, BitMEX, Binance Futures, ByBit, Huobi and Deribit deserve attention (they are in the TOP 10).Read more: Overview of the Huobi Global ExchangeThe process of trading derivatives should be considered in more detail.Choosing a broker and opening a trading accountThe choice of a broker should be given maximum attention. In addition to having a direct access to the exchange platforms of interest, you should check the license. The list of licensed brokers is presented on the official website of the Central Bank of the Russian Federation.It is useful to get acquainted with the reliability ratings on specialized Internet resources and reviews of real customers. After registering on the broker's website, creating a personal account, verifying your identity and installing a trading terminal (QUICK, MT4, MT5 or the broker's own developments), you need to top up your trading account.In some cases, access to the demo version (if available) is provided without making a deposit.Read more: Stock market Broker: how to choose it and how to work with itChoosing a derivativeOne of the main advantages of derivatives (namely futures) is a wide range of assets. We choose the market category from the following options: indices, commodities (energy, agricultural products, etc.), interest rates (LIBOR, RUONIA, etc.), currency or securities.After that, we select the type of trading instrument (a specific type of metal, a brand of oil, etc.). The choice should be made taking into account the previous trading experience. If a trader has been working with stocks for a long time, then futures and stock swaps are among the preferred instruments.Analysis of the market situationBefore making a final purchase decision, you should analyze the market situation using fundamental and technical analysis. It is necessary to take into account everything that may affect the value of the underlying asset in the future.It is not superfluous to study the history of quotes and track the news background.Read more: Chicago Mercantile Exchange (CME): history, structure, advantages and featuresPurchase of a contractAt the final stage, we determine the type of contract and the nuances of the specification. For example, there are 2 futures options available for gold — a standard one for 100 ounces and an e-mini (10 ounces). Having selected the necessary asset, we make a purchase request and confirm the transaction.At first glance, trading in derivatives (derivative financial instruments) seems simple and understandable.In reality, you need a lot of trading experience, a knowledge base, an understanding of the market situation, skills in analysis, risk management and the use of leverage.In the absence of proper training, it is advisable to undergo training and try out various strategies in the demo version. For beginners who do not have system knowledge, it is advisable to start with the most liquid and volatile instruments — oil futures, indices or blue-chip stocks.Read more: Causes of inflation and scientific approaches to their ...
EUR/USD: American business did not meet analysts' expectationsIn the current trading session, the EUR/USD pair is showing growth, moving to the level of 1.0700 and updating the highs since April 12 thanks to the released macroeconomic statistics.The values of the indices of business activity in the manufacturing sector in France and Germany for April showed 44.9 and 42.2 points, having stabilized relative to the previous month. In the service sector in France, the index increased from 47.7 to 50.5 points, and in Germany — from 50.1 to 53.3 points. The entire region showed a decrease in manufacturing activity from 46.1 to 45.6 points, while in the services sector the index rose from 51.5 to 52.9 points, which contributed to the growth of the composite index from 50.3 to 51.4 points. Today will bring a speech by the President of the German Federal Bank, Joachim Nagel, in which the forecasts of economic development and inflation are expected to be clarified.Resistance levels: 1.0730, 1.0800.Support levels: 1.0670, 1.0600.NZD/USD: currency pair shows a short-term uptrendThe NZD/USD pair is seeing a slight upward momentum, aiming to exceed the recent peaks of mid-April: the exchange rate is approaching 0.5950, reflecting an increase when traders analyze the latest New Zealand trade data. March reports showed an increase in exports from 5.79 billion to 6.5 billion dollars and a decrease in imports from 6.1 billion to 5.91 billion, reducing the trade deficit from 12.06 billion to 9.87 billion dollars, and allowing the trade balance to reach a surplus of 0.588 billion on a monthly basis.At the same time, the US currency came under pressure after the publication of business activity indices for April: the S&P Global manufacturing index fell from 51.9 to 49.9 points, which is worse than expectations for growth to 52.0, and the services index fell from 51.7 to 50.9 points, against the forecast of 52.0 points.Resistance levels: 0.5950, 0.5975, 0.6000, 0.6030.Support levels: 0.5920, 0.5885, 0.5858, 0.5830.Analysis for GoldThe price of gold showed an uptrend, reaching the level of 2325.0, but now it is experiencing a correction, indicating a decline in the activity of traders focusing on short-term operations.Recent statistics from the United States, presented this week, may delay the start of the interest rate cut cycle until the fall, given that the main indicators for the Federal Reserve remain the real estate and labor market sectors. The March report showed a decrease in the number of building permits to 1.467 million, which is the lowest level since last fall and indicates the untimely reduction of interest rates in the near future. According to the CME FedWatch Tool, the probability of monetary policy easing at the Fed meeting on May 1 is only 5.2%, and at the meetings on June 12 and July 31 — 14.8% and 37.9%, respectively. In this situation, investors who expected to profit from the strengthening of gold came to the conclusion that at the moment a correction is more likely than a further strengthening of prices.Resistance levels: 2350.0, 2410.0.Support levels: 2290.0, 2220.0.Oil market analysisIn the Asian trading session, the prices of WTI Crude Oil demonstrate stability, holding near the level of 83.30 dollars per barrel. This is happening against the background of the publication of April data on business activity in key sectors of the US economy, which turned out to be below analysts' expectations: the index in the manufacturing sector from S&P Global fell to 49.9 points, and in services fell to 50.9 points.It is expected that later today, at 14:30 GMT, new data on orders for durable goods in the United States for March will be announced, which may affect investment sentiment. It is predicted that the indicator for capital goods will decrease to 0.3%, while the total volume of orders excluding the defense sector, on the contrary, will increase to 2.5%. In addition, at 16:30, data from the US Energy Information Administration on oil reserves for the past week will be published, which are tentatively estimated to decrease by 1.7 million barrels.Attention should also be paid to the recent report of the US Commodity Futures Trading Commission, which showed a decrease in net speculative positions on WTI oil to 290.5 thousand. The reporting data indicate the restructuring of investors' portfolios, which may signal the anticipation of changes in the market. Thus, the balance of positions among producers and traders showed an active movement both to buy and to sell, which foreshadows possible fluctuations in oil prices in the near future.Resistance levels: 84.00, 84.75, 85.50, 86.00.Support levels: 83.00, 82.00, 81.00, ...
AUD/USD: market is anticipating the Australian inflation report for the quarterThe AUD/USD pair is experiencing a moderate rise, continuing the positive trend started yesterday, and is striving to exceed the value of 0.6450, updating the highs since April 15 against the background of current economic indicators.The index of manufacturing activity in Australia from S&P Global increased from 47.3 to 49.9 points in April, while the indicator in the service sector from Commonwealth Bank fell slightly from 54.4 to 54.2 points. The composite index showed an increase from 53.3 to 53.6 points. With the start of trading in the United States, data on similar indices are expected on the market: it is predicted that in the manufacturing sector the indicator will increase from 51.9 to 52.0 points, and in services it will also reach 52.0 points. In Australia, the quarterly inflation report is also due to be published this week, where the consumer price index is expected to accelerate from 0.6% to 0.8% of quarterly growth and decrease annual inflation from 4.1% to 3.4%.Resistance levels: 0.6456, 0.6480, 0.6500, 0.6524.Support levels: 0.6420, 0.6388, 0.6361, 0.6300.USD/CAD: currency pair stabilizes at 1.3700The USD/CAD pair shows volatile trends at 1.3700 during the Asian session, maintaining the pace of the recent bearish trend, which led to lows since April 12.Positive economic signals came from the United States, where the March activity index from the Federal Reserve Bank of Chicago rose to 0.15 points from 0.09. In Canada, meanwhile, new home prices remained unchanged after rising 0.1% in the previous month, and the growth rate of the industrial goods price index slowed to 0.8%, in line with forecasts.This week, the market's attention is focused on the American economy: on Thursday, the publication of primary GDP data for the first quarter is expected, which may show a slowdown in economic growth to 2.5% from 3.4%. On Friday, the key event will be an update on the personal consumption expenditure index, an important inflation indicator for the Federal Reserve, presumably showing an acceleration of the base value to 0.3% monthly and a slowdown to 2.6% on an annual basis.Resistance levels: 1.3700, 1.3750, 1.3800, 1.3853.Support levels: 1.3650, 1.3616, 1.3580, 1.3550.USD/JPY: increased business activity in Japan in AprilThe USD/JPY pair holds positions in the horizontal range around 154.72, while the US dollar shows signs of slowing down.Without intervening directly, the Bank of Japan continues to monitor the market situation, despite a number of minor interventions that were quickly smoothed out by the market. After switching from a policy of negative interest rates to a range of 0.0–0.1%, the regulator emphasizes that it will maintain a soft monetary policy due to weakening inflation.The upcoming macroeconomic publications will attract additional attention of investors: in April, the business activity index in the Japanese manufacturing sector rose to 49.9, and the index in the service sector improved to 54.6. March inflation statistics showed a drop: the general consumer price index fell to 2.7%, and the base index to 2.9%. On Friday, data on April inflation in Tokyo and the meeting of the Bank of Japan are expected, which may affect the policy of currency intervention.Resistance levels: 155.10, 156.80.Support levels: 153.90, 151.80.Analysis for GoldThe price of gold is experiencing a noticeable drop, deepening into the "bearish" trend that began in the previous days: at the moment, gold is struggling with the support level of $ 2310.00 per ounce, reaching lows that have not been observed since April 5. The downturn is fueled by a decrease in tensions in the Middle East and expectations that the US Federal Reserve will not adjust its monetary policy until the fall, perhaps even until the end of 2024.Nevertheless, there is activity in the gold futures market. According to the latest data from the Commodity Futures Trading Commission (CFTC), the volume of net speculative positions fell from 202.4 thousand to 201.9 thousand last week. The number of positions backed by cash reached 198,276 thousand for bulls and 25,415 thousand for bears. Over the past seven days, the volume of purchases decreased by 10,357 thousand contracts, while sales decreased by 4,078 thousand, indicating continued asset sales among market participants.Resistance levels: 2320.00, 2336.50, 2353.79, 2375.00.Support levels: 2300.00, 2285.00, 2265.52, ...
AUD/USD: pair has approached the support zone of 0.6489–0.6447During the Asian trading session, the AUD/USD currency pair is approaching the important support zone of 0.6489–0.6447 against the background of American statistics.Last week was marked by the publication of inflation data in the United States, which contributed to the strengthening of the US dollar in the market. The US consumer price index in March showed a monthly increase of 0.4%, which exceeded analysts' expectations of 0.3%, and the annual index was 3.5%, also higher than the predicted 3.4%. The producer price index increased by 2.1% year-on-year, from the previous 1.6%, although analysts expected an increase to 2.2%, while the monthly index decreased from 0.6% to 0.2%, ahead of forecasts of 0.3%. The core inflation rate rose from 2.1% to 2.4%, while the forecast was 2.3%. These data have increased doubts about the Federal Reserve's willingness to cut the rate by 25 basis points in June.The Australian economy also showed weak results: the number of construction permits issued fell by 1.9% monthly, which is in line with forecasts, while the previous figure was revised from -1.0% to -2.5%.Resistance levels: 0.6629, 0.6657, 0.6859.Support levels: 0.6489, 0.6447, 0.6353, 0.6285.Gold market analysisThe price of gold has stabilized around the level of 2350.00. Last week, gold reached a historic high, rising to the level of 2430.00, however, the bulls failed to hold this position, and many traders decided to realize the accumulated profits.The rise in gold prices continues to be supported by geopolitical instability and forecasts for rate cuts by the world's largest central banks. The European Central Bank is expected to lower interest rates as early as June, while the US Federal Reserve is likely to ease monetary policy later, with the first rate cut of 25 basis points expected in September.The latest macroeconomic data from the United States, published on April 12, increased pressure on the US dollar. The University of Michigan consumer confidence index fell from 79.4 to 77.9 points in April, which was lower than analysts' expectations of 79.0 points. The March import price index increased by 0.4%, accelerating by 0.1% compared to February, and on an annual basis the indicator also increased by 0.4% after a noticeable decrease of 0.8% a month earlier. Today, traders will closely monitor the March retail sales statistics in the United States, growth is expected to slow to 0.3% from February figures. The April index of business activity in the manufacturing sector from the Federal Reserve Bank of New York will also be published, an improvement from -20.9 to -9.0 points is projected.Resistance levels: 2375.00, 2400.00, 2431.44, 2450.00.Support levels: 2353.79, 2336.50, 2320.00, 2300.00.Cryptocurrency market analysisThe price dynamics of bitcoin tried to rise, breaking the 72000.00 level, but by the end of the week it fell sharply, losing about 14.5% of its value due to increased geopolitical tensions in the Middle East.Over the weekend, Iran conducted missile strikes against Israel, which led to investor fears about the possible outbreak of a large-scale military conflict, which, in turn, contributed to the reorientation of investments in defensive assets such as gold and the US dollar. This downward trend affected not only Bitcoin, but also the wide cryptocurrency market, where in a few days there were liquidations of open positions totaling about $2.5 billion. In addition, the pressure on digital assets was influenced by monetary policy, as the chances of continued high interest rates by the US Federal Reserve increased amid renewed inflationary pressures.These events lowered the price of Bitcoin to a six-week low of 60400.00, after which its partial recovery began. Traders are returning to the market, hoping that there will be no further escalation of the Iranian-Israeli conflict, according to representatives of American diplomacy. In this context, a possible resumption of growth of the main cryptocurrency assets, supported by the expectation of an upcoming halving in the Bitcoin network, seems quite likely in the foreseeable future.Resistance levels: 68750.00, 71875.00, 75000.00.Support levels: 62500.00, 59375.00, 56250.00.Crude Oil market analysisAfter rising to 92.42 on Friday, Brent crude oil quotes are experiencing a correction to 89.85 amid reports that the Iranian attack on Sunday caused minimal damage to Israel's infrastructure.Last week, after aggressive statements by Iranian leaders, the price of oil exceeded 92.00, as market participants feared the expansion of the armed conflict beyond the region. On Sunday, more than 300 rockets and drones were fired at Israel, most of which were successfully shot down by the Iron Dome air defense system. Mohammad Bagheri, the head of the General Staff of the Iranian Armed Forces, said that the "True Promise" mission has been completed and no further attacks are planned. According to him, Iran adheres to the principles of the UN Charter and is not interested in escalating the conflict. Against this background, the quotes of Brent Crude Oil moved to a decrease.The geopolitical situation in the Middle East remains difficult, which may lead to high volatility in the oil market in the coming months. Given that Iran is a significant oil producer in OPEC with production of more than 3 million barrels per day, the risks of supply interruption associated with sanctions and potential retaliatory actions by Israel contribute to the fact that the current price decline is rather corrective.Resistance levels: 91.95, 93.79, 96.22.Support levels: 89.10, 87.60, ...
NZD/USD: The Reserve Bank of New Zealand's interest rate remained at 5.50%The NZD/USD currency pair continues to show moderate growth, strengthening the bullish trend that began at the beginning of the week: currently, the exchange rate is approaching 0.6075, updating the highs since March 21 against the background of the latest decisions of the Reserve Bank of New Zealand on the key interest rate.As expected, the rate remained at 5.50%. The bank's official statement emphasized the importance of inflationary risks, which implies maintaining high rates for a long period. The bank's authorities also expressed the expectation that economic activity in New Zealand and its main trading partners may decline, in contrast to the stability of the US economy. It is assumed that major global central banks may begin easing monetary policy closer to the middle or end of the year, which will provide more data for analysis and subsequent market reaction.Meanwhile, the NZD/USD pair was pressured by fresh data from New Zealand: the business confidence index from the New Zealand Institute of Economic Research (NZIER) fell by 25.0% in the first quarter after a 2.0% decline in the previous quarter.Resistance levels: 0.6077, 0.6100, 0.6130, 0.6158.Support levels: 0.6045, 0.6030, 0.6000, 0.5975.GBP/USD: British retail increased by 3.5% in March%The GBP/USD currency pair shows minimal changes, being at the level of 1.2675. The day before, the pair actively grew and reached the highest since March 21, which was caused by the lack of significant macroeconomic data.The March report by the British Consortium of Retailers (BRC) showed an increase in retail sales in the UK by 3.2%, which is significantly higher than the expected 1.8% and the previous month with an increase of 1.0%. Easter celebrations contributed to a significant increase in demand for food, but overall sales growth remains moderate due to adverse weather and high inflation, with a noticeable increase in grocery spending by 6.8% and a decrease in non-food items by 1.9% in the first quarter. In the United States, business optimism data from the National Federation of Independent Business (NFIB) also turned out to be disappointing: the index fell from 89.4 to 88.5 points, falling short of the projected 90.2 points.Resistance levels: 1.2700, 1.2734, 1.2771, 1.2810.Support levels: 1.2650, 1.2600, 1.2573, 1.2539.Gold market AnalysisThe price of gold is in the correction phase within the framework of an uptrend, trading at around 2359.0. A new surge of growth is taking place in the market, which is supported by both private and institutional investors.Since the beginning of the year, a number of factors have favored an increase in quotations. The main support for the precious metals market is the current geopolitical tension: in the context of military conflicts in Ukraine and the Middle East, investors prefer investments in protective assets, among which gold acts as a reliable tool for preserving and increasing capital. This is also confirmed by trading volumes: according to the Chicago Mercantile Exchange (CME Group), the average trading volume over the past two sessions reached 306.5 thousand positions, which is significantly higher than 278.0 thousand in early March and 134.0 thousand. at the end of February.Resistance levels: 2375.0, 2450.0.Support levels: 2330.0, 2250.0.Crude Oil market analysisDuring the Asian trading session, prices for WTI Crude Oil are held at around 84.70, as traders refrain from opening new positions ahead of the release of today's US inflation data at 14:30 GMT+2.The price of oil was influenced by the latest forecasts of the US Energy Information Administration (EIA), according to which it is expected that oil production by OPEC+ countries in 2024 will decrease by 930 thousand barrels per day, which is 190 thousand barrels per day more than previous forecasts. By 2025, it is expected to increase production by 750 thousand barrels per day to 36.89 million barrels. Production forecasts for the current year have been adjusted by 470 thousand barrels per day, and for the next year — by 40 thousand barrels. In March, oil prices showed an increase for the third month in a row against the background of geopolitical risks associated with attacks on merchant ships in the Red Sea. In addition, the market was influenced by data from the American Petroleum Institute (API) on the dynamics of commercial oil reserves: in the week to April 5, inventories increased by 3.034 million barrels, while analysts expected an increase of 2.415 million barrels.Resistance levels: 85.50, 86.00, 87.00, 88.00.Support levels: 84.75, 84.00, 83.00, ...
NZD/USD: the growth rate slowed down before the meeting of the Reserve Bank of New ZealandSince the beginning of April, the NZD/USD currency pair has been trying to adjust within the medium-term downtrend. At the moment, the growth of the currency has slowed down at 0.6042 (Murray level [2/8]), in anticipation of the results of the upcoming meeting of the Reserve Bank of New Zealand and the upcoming publication of data on March inflation in the United States, scheduled for Wednesday.The New Zealand central bank is expected to keep its main interest rate at 5.50%, despite a significant deterioration in economic conditions and the onset of recession at the end of last year. The regulator is likely to emphasize that the inflation rate in the country is still too high, and announce plans to begin easing monetary policy no earlier than 2025, contrary to the expectations of investors, some of whom hope for a rate cut in August. Although such news may temporarily support the growth of NZD/USD, a significant increase in the value of the currency is not expected.Resistance levels: 0.6042, 0.6073, 0.6103.Support levels: 0.6012, 0.5950, 0.5920.USD/CAD: pressure on the Canadian labor market continuesAgainst the background of stabilization of the US dollar and disappointing macroeconomic statistics from Canada, the USD/CAD currency pair is at 1.3576.In March, the Canadian unemployment rate rose from 5.8% to 6.1%, exceeding analysts' expectations, which had predicted an increase to only 5.9%. This change occurred after the total number of employees decreased by 2.2 thousand people, while in the previous month there was an increase of 40.7 thousand with a forecast of 25.9 thousand. In particular, full—time employment decreased by 0.7 thousand, and part-time employment - by 1.6 thousand, with the share of the economically active population unchanged at 65.3%.In the USA, on the contrary, unemployment decreased from 3.9% to 3.8%, due to an increase in the number of jobs in the non-agricultural sector by 303 thousand compared to 270 thousand in the previous month, and in the private sector by 232 thousand, instead of the expected 207 thousand. This led to an increase in the index of labor market trends from 111.85 to 112.84 points, which should have a positive impact on the value of the US dollar.Resistance levels: 1.3600, 1.3720.Support levels: 1.3530, 1.3380.Gold market analysisThe XAU/USD currency pair is showing moderate growth, continuing to develop the active bullish trend observed in recent days, which regularly leads to an update of maximum values: at the moment, the price is testing the level of 2345.00 for a possible upward breakout, in anticipation of new catalysts in the market.The focus of investors' attention is the upcoming publication of March inflation data in the United States. The annual consumer price index is expected to accelerate from 3.2% to 3.4%, which may put pressure on the US Federal Reserve to abandon its conservative monetary strategy. The monthly index is expected to decrease from 0.4% to 0.3%, and core inflation will also adjust from 0.4% to 0.3% and from 3.8% to 3.7%. On the same day, the minutes of the Fed's March meeting are expected to be released, which will help clarify the regulator's plans for monetary policy. The main expectation of investors remains a possible interest rate cut as early as June, and at least three adjustments before the end of 2024, although the postponement of the beginning of monetary easing to the end of the year is now being actively considered.Resistance levels: 2353.79, 2375.00, 2400.00, 2425.00.Support levels: 2336.50, 2320.00, 2300.00, 2285.00.Crude Oil market analysisBrent Crude Oil prices continue to show potential for growth, remaining at 91.07 amid growing fears that the ongoing conflict between Israel and Hamas could lead to disruptions in supplies from oil-producing countries in the Middle East.Earlier, oil prices fell amid reports of a decrease in geopolitical tensions: last weekend, Israel announced plans for a partial withdrawal of troops from the southern Gaza Strip, as well as the resumption of peace talks under the auspices of Egypt, which temporarily led to a decrease in prices from 91.95 to 89.11. However, on Monday, Israeli Prime Minister Benjamin Netanyahu said about preparations for a possible invasion of Rafah, which inevitably renewed fears in the market and caused an increase in oil prices.Resistance levels: 91.95, 93.79, 96.22.Support levels: 89.10, 87.60, ...
AUD/USD: the long-term vector of "hawks" has led to increased pressure on householdsThe AUD/USD currency pair is experiencing volatile dynamics, being near the 0.6540 indicator: Monday's session ended with a noticeable rise, mainly due to technical aspects.The Reserve Bank of Australia's latest semi-annual review, presented on Friday, notes that despite the fact that rising inflation and interest rates have put family budgets at risk over the past two years, most borrowers are still meeting repayment schedules. Since the regulator began raising rates in May 2022, debt service costs have increased by 30-60%. Nevertheless, one in twenty mortgage holders in Australia spends more than they earn, but the share of housing loans with a delay of more than 90 days is less than 1%. The report also highlights that the healthy labor market situation helped to maintain the ability of Australians to pay off debts: in February, the unemployment rate fell to 3.7% compared with 4.1% earlier, and the number of new jobs reached a record 117.0 thousand.Resistance levels: 0.6554, 0.6578, 0.6600, 0.6616.Support levels: 0.6524, 0.6500, 0.6486, 0.6468.USD/CHF: the US dollar checks the 0.9000 level for the possibility of an upward breakoutDuring Asian trading, the USD/CHF currency pair shows a slight strengthening, trying to overcome the barrier at 0.9000, which it sought to gain a foothold on Friday.The US dollar is receiving limited support due to fading assumptions about the imminent transition of the Federal Reserve System to a softer monetary policy this summer: optimistic economic data and additional evidence of increasing inflationary pressures give grounds for the Fed to maintain a cautious course. Now the chances of a 25 basis point interest rate cut at the June meeting are estimated to be slightly above 60%, while a week ago this figure was at 53%.The change in expectations may be due to the recent decision of the Swiss National Bank to lower rates by 25 basis points, despite analysts' forecasts that they would remain at 1.75%. The accompanying document emphasized that inflation has been within the 2% target for several months now, and it is not expected to accelerate in the foreseeable future. In addition, by the end of 2025, the forecast for the consumer price index was adjusted from 1.9% to 1.4%. The market foresees at least two more rate cuts before the end of this year.Resistance levels: 0.9000, 0.9037, 0.9072, 0.9100.Support levels: 0.8964, 0.8935, 0.8900, 0.8865.USD/JPY: yen is approaching a record lowIn the context of the strengthening of the US dollar and after the Bank of Japan abandoned the policy of negative interest rates, the USD/JPY exchange rate is gaining momentum, reaching 151.40, and is heading towards exceeding the record mark of 151.90.Traders analyzed the conclusions from the latest minutes of the meeting of the Japanese central bank, at which it was decided to increase the interest rate from -0.10% to 0.10% and adapt the terms of the asset purchase program: continued purchases of government bonds will be carried out without a fixed limit, while operations with ETFs and J-REITs will be stopped. In light of the current decline in the value of the yen, Japanese Vice Minister of Finance Masato Kanda pointed to the speculative nature of this phenomenon, which does not reflect the real economic picture, and expressed his readiness to take all necessary steps to prevent a further fall in the currency. At the same time, the preliminary index of economic indicators for March showed a decrease of 0.4% to 109.5 points, while the inflation rate of production prices remained at 2.1% year-on-year, unchanged from the previous month.Resistance levels: 151.95, 154.10.Support levels: 150.60, 148.30.Gold price analysisThe XAU/USD currency pair is stabilizing near the level of 2170.00 after a fluctuating rise a day earlier. Traders refrain from opening new deals, preferring to wait for fresh economic data and statements from members of the Federal Reserve System that can give an idea of the future direction of monetary policy. The main forecast in the market remains the assumption of a 25 basis point interest rate cut in June, although at the moment the probability of such an outcome barely reaches 60%. It is expected that only 3-4 rate corrections will occur this year, but the market is still under the influence of numerous risks.Today, the US is due to publish data on orders for durable goods, where an increase of 1.3% is expected in February after a decrease of 6.2% in the previous month, while orders excluding military and aviation goods may show an increase of 0.1% after stagnation in January. An important indicator for the Fed, reflecting average inflation, will be presented on Friday, when most European markets will not work due to the Easter holidays. The price index of personal consumption expenditures for February is expected to grow by 0.4% after an increase of 0.3% in the previous month, with a possible acceleration in annual dynamics from 2.4% to 2.5%, while the base index may remain at 2.8%.Resistance levels: 2181.30, 2195.12, 2215.00, 2230.00.Support levels: 2164.68, 2150.00, 2134.09, ...
EUR/USD: positive trends in the German economy are gaining momentumContrary to expectations for an improvement in the economic climate in the European Union, during the Asian trading session, the euro shows a correction in pair with the dollar, stabilizing at 1.0868.The latest data from Eurostat indicate an increase in the consumer price index by 0.6% in February, which is in line with experts' forecasts and helps to lower annual inflation from 2.8% to 2.6%, bringing it closer to the ECB's target of 2.0%. A study by the Center for European Economic Research (ZEW) in March showed a slight improvement in assessments of the current economic situation in Germany and an increase in economic optimism both in Germany and in the eurozone as a whole.The day will continue with the publication of data on industrial inflation in Germany, which indicates a monthly correction from 0.2% to -0.4% and a moderate slowdown in annual inflation. In addition, statistics on construction production in the eurozone and updated consumer confidence indicators expected to improve are to be disclosed. The market's anticipation of news about future monetary policy will increase after the speech by Christine Lagarde, head of the ECB.Resistance levels: 1.0900, 1.0980.Support levels: 1.0840, 1.0760.USD/CHF: experts predict the stability of the Swiss National Bank rateThe USD/CHF pair is showing moderate growth, approaching the 0.8895 indicator in order to overcome it in the direction of an uptrend, while updating the peak values for mid-November 2023. Market activity is characterized by moderation, as market participants take a wait-and-see attitude on the eve of the announcement of the results of the two-day meeting of the US Federal Reserve System. While dramatic shifts in the regulator's approach are not expected, some investors are beginning to doubt the implementation of the plan for three rate cuts within a year. If the regulator indicates the possibility of only two adjustments, this may cause the strengthening of the US dollar.The Swiss National Bank will also hold a meeting on monetary policy issues tomorrow, scheduled for 10:30 GMT (+2). Analysts assume that there will be no changes in monetary policy, and the rate will remain at 1.75%. The probability of monetary policy adjustments by the Swiss regulator will arise after the decisions of the American and, possibly, European central banks. It is important to note that inflation in Switzerland showed a decrease to the lowest since October 2021, amounting to 1.2% on an annual basis in February. Prices for food and non-alcoholic beverages increased by 0.8% over the year, housing and energy accounted for an increase of 3.1%, and the cost of educational services rose by 1.8%. At the same time, healthcare costs decreased by 0.4%, and transportation costs decreased by 0.5%.Resistance levels: 0.8900, 0.8950, 0.9000, 0.9025.Support levels: 0.8865, 0.8850, 0.8820, 0.8800.USD/CAD: US dollar is gaining momentumDuring morning trading in Asia, the USD/CAD exchange rate shows strengthening, actively testing the 1.3575 level for an upward breakout. This is happening against the background of yesterday's achievement of new peaks, unseen since December 13, although the bullish mood has subsided a little since then.The Canadian dollar is under additional pressure due to the country's domestic economic statistics: the February consumer price index jumped 0.3% after stagnating in the previous month, falling short of the expected 0.6%. This led to a slowdown in the annual growth of the index from 2.9% to 2.8%, which is lower than analysts' forecasts of 3.1%, and core inflation decreased from 2.4% to 2.1%. Given that price pressure is decreasing faster than expected, this may help strengthen the cautious position among representatives of the Bank of Canada regarding future monetary policy.Resistance levels: 1.3600, 1.3650, 1.3700, 1.3750.Support levels: 1.3550, 1.3525, 1.3500, 1.3450.Gold analysisDuring the Asian trading session, gold prices stabilized around the 2155.00 mark. Market participants are being cautious, postponing active trading actions in anticipation of the results of today's announcement following the meeting of the US Federal Reserve. The interest rate is expected to remain at 5.25–5.5%, but the focus is on the prospects for future policy expressed in the comments of the regulator. Market participants mostly adhere to the forecast of the first rate cut in June and possible three adjustments until the end of 2024. If the Fed highlights the risks of inflation and reduces the number of expected downgrades to two, this could strengthen the position of the US dollar.The next day, the market's attention will switch to the results of the meetings of the Swiss National Bank and the Bank of England, which are expected to leave their current settings unchanged, but express a desire to get acquainted with additional data on consumer inflation for further decisions. At this point, gold is under slight pressure, as it seems that the world's central banks prefer not to rush to change their course, following the policy of the Federal Reserve.Resistance levels: 2164.68, 2179.85, 2195.12, 2215.00.Support levels: 2150.00, 2134.09, 2120.00, ...
EUR/USD: the currency pair exceeds the key level of 1.0880–1.0710During the Asian session, the EUR/USD currency pair continues to fluctuate around the 1.0925 mark, maintaining the likelihood of an uptrend extension against the background of fresh economic data from Europe.The February consumer price index in Germany confirmed expectations, rising by 0.4%, which contributed to the anticipated correction of the annual index from 2.9% to 2.5%, bringing it closer to the 2% threshold desired by the European Central Bank. Its harmonized analogue grew by 0.6% over the month and by 2.7% over the year, in line with forecasts and previous indicators. It is expected that data on industrial production in the eurozone will be released today at noon GMT, forecasts for which foreshadow a decline in the indicator to -2.8% on an annual basis and to -1.4% for the month, which may have an impact on the euro.Resistance levels: 1.0950, 1.1060.Support levels: 1.0890, 1.0750.NZD/USD: sales via e-cards in New Zealand fell by 1.8% in FebruaryThe NZD/USD trading instrument makes a correction near the indicator 0.6161 after the publication of negative economic statistics from New Zealand.Report Stats.nz He pointed to a decrease in retail sales through electronic cards in February by 1.8%, which is equivalent to a decrease of NZ$ 120 million, and in key sectors of the economy by 1.4% or NZ $83 million. The decline was noted in such categories as fuel costs (-3.7%), clothing purchases (-1.5%), purchase of durable goods (-0.9%), consumables (-0.9%) and vehicles (-0.3%). At the same time, the annual sales figure increased by 2.5%. Additional support for the currency pair was provided by data from China, where the consumer goods price index rose by 0.7% year-on-year in February, exceeding analysts' expectations, which assumed an increase of 0.3%.Resistance levels: 0.6180, 0.6250.Support levels: 0.6130, 0.6050.Gold market analysisGold is near the 2160.0 mark, waiting for new incentives to move. Currently, the correction is taking place against the background of the realization of profits on long positions after the breakout of the resistance level of 2100.0.The influence of global factors indicates the likelihood of an uptrend continuing. Despite the soft position of the chairman of the US Federal Reserve, Jerome Powell, expressed in Congress on interest rates, the rate cut has not yet begun. The forecasting tool of the US Federal Reserve System from the Chicago Mercantile Exchange (CME FedWatch Tool) shows that the probability of maintaining the current rate at the March meeting reaches 99.0%, leaving the dollar without significant support. The situation on the government bond market also has a positive effect on gold prices, where the yield on ten-year bonds fell to 4.148% from 4.283% last week.Resistance levels: 2180.0, 2240.0.Support levels: 2130.0, 2080.0.Crude Oil market analyticsWTI Crude Oil quotes are at the level of 77.88, expecting a possible continuation of the downward trend after the US Department of Energy adjusted its forecasts for oil production, anticipating an increase in production by 80.0 thousand barrels per day to 13.19 million barrels per day, which may put pressure on the cost of energy resources. US data also indicate an increase in inflation in February from 0.3% to 0.4%, with the benchmark index at 0.4%, which exceeded analysts' expectations of 0.3%. This could force the US Federal Reserve to postpone an interest rate adjustment, potentially having a negative impact on oil prices.However, optimism in the market is supported by the monthly OPEC report, which forecasts an increase in oil demand this year by 2.25 million barrels per day and next year by 1.85 million barrels per day. Additional support comes from a reduction in reserves in the United States, according to data from the American Petroleum Institute (API), with a decrease of -5.521 million barrels, exceeding experts' forecasts.Taking into account these conditions, the current stability of oil prices in the range of 79.62–77.64 is maintained until new factors appear that may make adjustments to the movement of market prices.Resistance levels: 77.64, 79.62, 83.50.Support levels: 75.60, 72.11, ...
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 ...
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 ...
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 ...
Is it worth investing in Gold now?Gold is the most popular precious metal for investment. The profitability of investments in it is subject to significant fluctuations, but over the past 5 years, the precious metal has brought investors ~68% in dollars, the average annual yield was ~13.6%.What does the price of Gold depend onTraditionally, it is believed that investing in Gold protects against inflation. But in many ways, metal prices depend on supply and demand. In the first place in terms of demand for Gold is the jewelry industry ~45%. Investments in it take ~25-30%. Purchases of gold by central banks on average amount to ~15-20%. Production accounts for ~7-10% of the total demand. Read more: Causes of inflation and scientific approaches to their studyWhat is the current situation with supply and demandAccording to a study by GOLDHUB, the demand for gold in the first half of 2021 decreased by 10% year-on-year to 1885.2 tons. Gold production increased by 4.27% to 2307.9 tons. What the banks say The banks' opinions on Gold prices are divided. Credit Suisse and Société Générale forecast a decline in gold prices to an average of $1,670 per ounce with a ceiling of $1,792 by the end of the year. Commerzbank and Standard Chartered are more optimistic — the banks believe that Gold prices can recover to $1834 and $1820 per ounce, respectively.Analysts' opinionThere is a surplus of Gold supply in the amount of 422.7 tons on the market. To reduce it, it is necessary that the demand for jewelry and investment increased by 20%, and production remained at the current level. But the growth of gold production by 2023 is projected to be almost 2 times. Given the possible increase in the Fed rate by 2023 and the associated growth of the dollar, the strong growth of gold looks doubtful. It seems that the prices for precious metals in the near future will range from $1,670 to 1,820 per ounce. The current price levels for investors look unattractive from the point of view of prospects for 12-18 months. Most likely, Gold will provide more interesting levels to buy.Read more: What does the Fed rate ...
Without exaggeration, Gold can be called one of the most popular precious metals. It is Gold that is considered to be a safe haven asset, to which funds should be transferred in the event of financial crises. However, as it turned out, in 2021, competent financial market participants were divided into 2 groups: some believe that Gold has already outlived itself, since investing in a net asset will not allow you to extract passive profit (dividends), while others are convinced that Gold is the only real money that is not afraid of inflation and other troubles of modern economic reality.It is striking that the above-mentioned opinions do not contradict each other in any way. Each of the beliefs can be considered fair. It all depends on the specific macroeconomic situation. For example, in 2020-2021, gold is in high demand due to economic instability, which was caused by COVID-19. The price of Gold is steadily growing in the medium term, and periodically emerging local downtrends are only a natural correction of the global uptrend.Let's not forget that Gold is a limited resource despite the fact that the demand for this metal is consistently at a high level. This fact practically guarantees the continuation of the global uptrend in the long term. Can investing in Gold protect against inflation? The downward corrections on the charts reflecting the pricing of gold can be quite long. It is not entirely correct to see investments in this metal as just a way to protect against inflation. The last 50 years suggest that it is much better to consider investments in securities (shares of companies with high capitalization, or in government bonds) to protect free funds from depreciation. In the period from the 80s to the early 2000s, the value of gold decreased from 500 USD to 250 USD. During the same period, the purchasing power of the US dollar also decreased by 57%. As a result, Gold not only failed to meet the expectations of investors,but also provided a serious drawdown. However, those who refused to sell gold at 250 USD per ounce today can extract superprofits, since the current value of the metal at the time of writing exceeds the mark of 1800 USD.Read more: Causes of inflation and scientific approaches to their studySumming up a small sum, it should be said that Gold is indeed a reliable object for investing free funds, but only in the long term. The value of Gold and geopolitics In the period from the 80s to the early 2000s, the United States was the absolute leader in the world. The USSR collapsed, and the PRC was not ready for an economic breakthrough. This state of affairs suited many, since American regulators dictated uniform rules of the game in the financial markets and strictly controlled them. There were enough objects for investment, both for holders of significant capital and for the middle class. The price of Gold declined during this period, as investors were offered more profitable directions. In 2021, the situation has changed radically. There are players in the arena in the face of Russia and China and India, who are not satisfied with the model of a unipolar world. Oddly enough, but the start for the development of these states was the terrorist attacks of 2001 in the United States. From that moment on, echoes of anti-globalism began to appear in the geopolitical space. This directly affected the price of Gold, which is clearly visible on the monthly chart:Gold, 1M It is quite simple to explain this: the United States has serious competitors in the face of Russia, China and other developing countries. Competition became the main cause of economic instability, which contributed to the growth of Gold capitalization. How can a possible "de-dollarization" affect the price of Gold? Since 2008, the United States has increasingly abused its financial position. The status of the USD as a single reserve currency does not suit many people anymore. At the moment, a number of countries are already looking for an alternative to green American bills, and the central banks of Russia and China are actively increasing the share of the yellow metal in their own reserves. In the Russian Federation, this share has already exceeded the mark of 20%. If you believe the forecasts of prominent analysts, the volume of capital investments in Gold by the central banks of a number of countries will only increase over the years. Of course, this will lead to an increase in capitalization and, consequently, to a significant increase in value. Currency wars It is quite possible that in the foreseeable future we will be lucky to witness a real war between the currencies of different countries. This will significantly increase the volatility of financial markets and create good opportunities for effective trading. The reason for currency wars can be a strong debt burden of the world. It is known that the total GDP of all countries cannot exceed 80 trillion USD per year. At the time of writing, the global debt is estimated at $ 400 trillion, which is 5 times more than the maximum possible total GDP. By the way, the lion's share of this debt (more than 70%) lies on the shoulders of the United States. The reason for the formation of such a debt was a loyal mortgage policy, as well as the credit system as a whole. Of course, these 400 trillion US dollars are unsecured pieces of paper. Sooner or later, this bubble will burst, which will lead to a large-scale devaluation of all world currencies. With such a development of events, the value of Gold will obviously grow at a furious pace. Read more: Volatility: types, how to track and how to useGiffen's product Among the trading participants in the financial markets, there is such a term as a Gifen commodity. This is a conditional asset, along with an increase in the value of which the demand for it also increases. A striking example is the Apple iPhone. Fundamental changes have not been made to the device for a long time, just like in the OS, but the demand and cost of goods are only growing every year. Something similar can now be observed on the charts reflecting the dynamics of the pricing of the yellow metal. Its current value is breaking world records, while the capitalization continues to increase every month. Is it worth buying Gold in 2021 to save and increase funds? Taking into account all the above, the answer is obvious. Yes, Gold will definitely increase in price both in the long and short term. Statistics on COVID-19 remain disappointing, new strains make vaccination an ineffective means of protection in the EU countries, and restrictive measures are still relevant in a number of countries. This crisis led to the fact that the price of Gold marked a new, absolute historical maximum at around 2121 USD per ounce. Since the cause of the crisis remains relevant, there is every reason to believe that in the foreseeable future we will see new highs on the XAU/USD pair. In addition, other facts mentioned above allow us to confidently speak about the growth of the value of the yellow metal:The debt burden exceeds the total GDP.Central banks of developing countries are actively increasing the share of Gold in their own international reserves.he demand for Gold continues to increase among both private and institutional investors.Conclusion: in 2021, Gold is no longer just an instrument of protection against inflation. This is an asset, investments in which can significantly increase the capital.Read more: What is the devaluation of ...
For centuries, gold has been associated with wealth and prosperity. For centuries, gold has been an almost invariable measure of value. In the long run, gold is always growing. In addition, during periods of global economic and financial crises, only gold strengthens in value, while prices for other assets fall. Therefore, many investors prefer to experience such difficult times, having some "gold reserve" in their portfolio. Gold traditionally acts as a safe haven for savings. It is not for nothing that many institutional investors, central banks necessarily keep part of their assets in gold, and states have a safety cushion in the form of yellow precious metal reserves (gold and foreign exchange reserves).Retail investors have different opportunities to invest in gold: bullion and coins, depersonalized metal accounts in banks, futures and CFDs on gold, ETFs, shares of gold mining companies.In this article, we will consider another option for investing in the yellow metal – through the purchase of a spot contract for gold. This tool is still young and, unfortunately, is not yet available to all investors. But as the involvement of new professional market participants in this process increases, it has every chance to acquire the status of a mass one.What is a spot contract?A spot contract is a trade transaction that involves the direct sale or purchase of an asset with delivery and settlement in a short time for cash or another asset at the market price at the time of the transaction. In simple words, this is a trade transaction at a price and with the calculation "on the spot".The spot price is the current market price of an asset.A feature of the spot market is that the assets of the seller and the buyer are always available.Different asset classes are available on spot markets: stocks, bonds, commodities, currencies, cryptocurrencies and precious metals. The platforms for spot trading can be stock exchanges, commodity exchanges, cryptocurrency exchanges. However, there is also over-the-counter or off-system trading - directly between market participants.Spot contracts are one of the opportunities to invest in gold.Read more: What is a CFD?Features of the gold spot marketThe main pricing platform for gold and other precious metals on the world market is the London Bullion Market Association (LBMA). London fixing is set twice a day based on quotations from the world's largest sites and exchanges and is used in most contracts for the supply of precious metals on the world market. When there is a significant price difference on individual exchanges, arbitration occurs, which balances them. The price of a spot contract for gold in the domestic market is not tied to fixing, but it closely correlates with it. The ratio of supply and demand has a great influence on prices in the domestic spot gold market. Naturally, the market situation, as well as investors' expectations about the further dynamics of the price of the "golden asset", respond to the balance of these components.Since the price is determined by supply and demand, the spread between the purchase and sale price is small.There are several commissions when buying a spot gold contract: the exchange commission and the broker's trading commission. Of course, if the broker still has a depository commission, then during the periods of transactions on the account, these costs will also be included.Pros and cons of gold spot contractsAny investment instrument has its pros and cons. The investor's task is to find a balance of these components for himself.Advantages of buying gold on the spot market:"It is much more convenient than in a bank" – there is no need to look for a bank branch where operations with precious metals are available, there is no need to worry about storing physical gold – after all, damage to bullion and coins can have an extremely negative impact on their liquidity and value, there is no need to worry about safety and security, there is no need to compare the price of gold in different banks in search of the best offer.Spot contracts are cheaper – the price is not set by the bank itself, but is made up of the ratio of supply and demand in the stock glass.Long-term investment opportunities. Unlike futures contracts, a spot contract is not time-limited. That is, you can "keep gold" in the portfolio for as long as you want and do not need to worry about transferring funds from one contract to another.The ability to combine spot and futures contracts allows experienced investors to implement different trading strategies and hedge risks.When buying gold through a spot contract, the investor does not have any problems and costs associated with storing gold, as in the case of buying bullion or gold coins.No restrictions on the purchase of gold. Through a spot contract, you can buy any amount of gold – from grams to kilograms, the restriction can only be related to the amount of supply.Read more: How Portfolio Investing WorksOf course, each tool has its own disadvantages. In the case of spot contracts , the following can be noted:Not all brokers provide access to gold exchange trading. Above, we have indicated a list of brokers that give their private clients access to operations with spot contracts for gold.The possibility of margin trading can be considered both as a plus and a minus of the instrument in the absence of knowledge of how to use it.Risks of loss of funds. Since the supply of physical metal is not provided, and the Depository does not keep records of spot contracts for gold, the only confirmation that the investor owns gold is a brokerage report. And although the clients' assets placed on a special brokerage account for precious metals are not subject to recovery for the broker's obligations, in the event of the broker's bankruptcy, the client bears great risks of losing gold, or rather money. All this suggests the need for careful selection of a broker.Binding to one broker. That is, buying and selling gold through a spot contract is possible only with one broker. Transfer of assets from one broker to another is not possible.ConclusionGold spot contract is one of the options for investing in gold, more convenient, highly liquid and profitable compared to buying gold in a bank. Perhaps it will not provide such capital growth as stocks, but as a diversification of "gold savings" it can be a worthy alternative.A reasonable investor should always remember the rules of diversification of the investment portfolio and not fall into a "gold rush" at any manifestation of the crisis in the economy. Gold cannot act as a full-fledged protective asset. Its value is volatile: during periods of crisis, it can grow, but during periods of calm and economic growth, gold usually falls in price. Only bonds can perform the protection function in an investment portfolio by 100% – they bring a fixed and previously known income.Gold can be part of an investment portfolio, but as a component of broad diversification. Only such an investment portfolio will show stable results under any economic ...