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: Euro holds near recent November lowsThe EUR/USD currency pair shows uncertain trends, holding near the 1.0800 level and new lows on November 14, set a day earlier.The American JOLTS data on the number of open vacancies had a negative impact on the pair. In October, their number decreased by 617.0 thousand to 8.733 million, which was the lowest since the beginning of 2021, while a decrease from 9.35 million to 9.30 million was expected. The weakening US labor market and a decrease in inflation risks affect assumptions about the end of the US Federal Reserve's interest rate hike cycle. Experts hint at the possible start of rate cuts as early as March 2024. Additional support for the US dollar was provided by November indicators of business activity in the services sector: the ISM index increased from 51.8 to 52.7 points, which exceeded expectations of 52.0 points.Resistance levels: 1.0800, 1.0850, 1.0900, 1.0930.Support levels: 1.0765, 1.0730, 1.0700, 1.0660.AUD/USD: RBA does not rule out a rate increase in the futureThe AUD/USD currency pair is experiencing a correction after a significant drop in the last two sessions. It is trying to overcome the 0.6600 level, but growth is hampered by Australian economic data.The Australian dollar is feeling pressure due to the latest decisions of the Reserve Bank of Australia (RBA), which left the rate at 4.35%, despite forecasts of an increase. In November, the bank raised the rate by 25 basis points after holding it steady for four months amid high core inflation. The improvement in the labor market and the rising cost of housing in the country also affect the policy of the RBA. According to RBA Chairman Michelle Bullock, future monetary policy measures will depend on economic data and risk assessment. A high rate contributes to the balance between supply and demand in the economy, although inflation continues to affect real incomes, while consumer spending and housing investment remain weak, which supports the need for high interest rates.Resistance levels: 0.6600, 0.6630, 0.6675, 0.6700.Support levels: 0.6543, 0.6500, 0.6450, 0.6400.Gold price AnalysisThe price of the precious metal is near the 2020.00 level, having given way after updating record highs this week. Its decline is taking place against the background of a gradual strengthening of the US dollar, while market activity remains moderate, and investors expect important economic data from the United States.Among the expected publications are today's report from ADP on private sector employment and Friday's data on the US labor market for November. Forecasts indicate employment growth of 130.0 thousand after an increase of 113.0 thousand last month. It is expected that the creation of new jobs in the non-agricultural sector will increase from 150.0 thousand to 185.0 thousand, and the average hourly wage is expected to change from 0.2% to 0.3% on a monthly basis and from 4.1% to 4.0% on an annual basis.The gold price continues to be supported by expectations regarding the possible refusal of the US Federal Reserve to tighten monetary policy and start lowering interest rates next year earlier than originally expected. Some experts suggest that this could happen as early as the March meeting.Resistance levels: 2030.00, 2050.00, 2065.00, 2085.00.Support levels: 2015.30, 2000.00, 1987.29, 1972.85.Crude Oil Market AnalysisNorth American WTI light crude oil is experiencing a downward correction, being at the level of 72.43.The price drop is due to investors reviewing potential supply volumes in the light of OPEC+'s decision to further reduce oil production. To reduce by 1.5 million barrels per day from Russia and Saudi Arabia, another 700.0 thousand barrels will be added from countries such as the UAE (163.0 thousand), Kuwait (135.0 thousand), Kazakhstan (82.0 thousand), Algeria (51.0 thousand) and Oman (42.0 thousand), which in total will increase the overall production cut up to 2.2 million barrels per day. This should help stabilize oil prices and reduce speculative fluctuations. Brazil's decision to join OPEC+ from 2024 was also a key factor for the market, which will strengthen the alliance's influence on the global oil market.Resistance levels: 74.00, 78.50.Support levels: 71.20, ...
EUR/USD: euro grows before eurozone inflation dataThe EUR/USD currency pair continues to show moderate growth, continuing the bullish trend started last week. The currency seeks to strengthen above the level of 1.1000, ahead of the expected economic reports from the European Union and the United States.Today, investors are focused on the November statistics on consumer confidence in the Eurozone, where the indicator is expected to remain stable at -16.9. A slight improvement in economic sentiment is expected, with a correction from 93.3 to 93.7 points. Also due for release is German inflation data for November, where the annualized consumer price level is forecast to decline from 3.8% to 3.5%, with a 0.2% decline expected on a monthly basis. The harmonized consumer price index is forecast to be -0.3% on a monthly basis and 2.7% on an annual basis. The Gfk Group survey showed a slight improvement in sentiment among German consumers to -27.8 points, better than forecasts. In addition, the pace of private sector lending in the eurozone fell from 0.8% to 0.6% in October, while business lending fell 0.3%, the first decline since 2015.Resistance levels: 1.1000, 1.1050, 1.1100, 1.1150.Support levels: 1.0964, 1.0930, 1.0900, 1.0850.USD/CAD: US dollar continues to be under pressureThe USD/CAD currency pair has been showing a downward trend since the beginning of November and is currently approaching the level of 1.3549.The US dollar is under pressure due to investors' beliefs that the Federal Reserve will soon start discussing the prospects of interest rate cuts. Christopher Waller, a member of the Federal Open Market Committee, suggested the possibility of a rate cut if inflation continues to decline over the next 3-5 months. On Thursday, data is expected to be released on the core private consumption price index for October, which is expected to fall from 3.7% to 3.5% year-over-year. The realization of these forecasts may strengthen the position of supporters of a looser monetary policy in the Federal Reserve, which may have a negative impact on the US dollar.Resistance levels: 1.3705, 1.3793, 1.3916.Support levels: 1.3549, 1.3450, 1.3305.Gold price analysisThe currency pair XAU/USD is witnessing a slight rise, continuing the uptrend in the short term and updating the last highs recorded in early May. The currency is actively testing the possibility of overcoming the level of 2050.00, with the US dollar feeling moderate pressure due to expectations of the end of the tight monetary policy of the Federal Reserve. Recently, Federal Open Market Committee (FOMC) member Christopher Waller emphasized that a loosening of policy in the coming months is being considered, provided inflation slows. However, other members of the regulator have pointed to potential price increases, especially in energy.Today, investors are focused on revised U.S. gross domestic product (GDP) data for the third quarter and the Federal Reserve's economic report, known as the Beige Book. Tomorrow will see the release of October data on personal consumption price indexes, important for the Fed's inflation forecasting. The annualized core rate is expected to fall from 3.7% to 3.5% and the monthly rate from 0.3% to 0.2%. Also to be released are the statistics on personal income and household spending, where income growth is expected to slow from 0.3% to 0.2% and spending from 0.7% to 0.2%.Resistance levels: 2050.00, 2065.00, 2085.00, 2100.00.Support levels: 2030.00, 2015.30, 2000.00, 1987.29.Crude Oil Market AnalysisWTI Crude Oil prices are in a horizontal trend, hovering around 76.55. Hydrocarbon prices have shown resilience this month after setting the date for the next OPEC+ summit to be held on November 30 via video conference. The postponement of the meeting was due to discrepancies in the alliance regarding oil production quotas. Experts' forecasts lean toward maintaining current production levels, especially from Saudi Arabia and Russia, which have agreed to cut production by an additional 1.3 million barrels per day.Oil price movements are largely dependent on US hydrocarbon inventory reports. The positive movement was interrupted this week, with the American Petroleum Institute (API) reporting a -0.817 million barrel decline in inventories after a significant increase of 9.074 million a week earlier, implying a likely decline in the U.S. Department of Energy's Energy Information Administration (EIA) report to be released today. Analysts anticipate a -0.933 million barrel decline after an increase of 8.701 million a week earlier, which could support oil prices.Resistance levels: 77.70, 81.20.Support levels: 75.50, ...
NZD/USD: Neuseeländischer Dollar nahe SpitzenwertenDas Währungspaar NZD/USD erfährt eine Korrektur nach dem Anstieg der letzten Woche, als es seit dem 10. August frische Höchststände erreichte. Im Moment testet der Kurs das Niveau von 0.6060 auf die Möglichkeit eines Rückgangs, in Erwartung neuer Anreize auf dem Markt.Der heutige Tag wird die Aufmerksamkeit der Anleger auf die US-Verkaufszahlen für neue Häuser für Oktober und den November-Geschäftsaktivitätsindex der Federal Reserve Bank von Dallas lenken. Händler werden wahrscheinlich vorsichtig sein, neue Positionen bis Mittwoch, den 29. November, zu akzeptieren, wenn das Treffen der Reserve Bank of New Zealand stattfindet. Es wird erwartet, dass die Bank die Geldpolitik nicht strafft und den Zinssatz bei 5,50% belassen wird.Der neuseeländische Dollar wird von den am vergangenen Freitag veröffentlichten Einzelhandelsumsätzen für das dritte Quartal leicht unterstützt. Diese Daten zeigten Stabilität, nachdem sie im Vorquartal um 0,9% gefallen waren, im Gegensatz zu den Prognosen für einen Rückgang um 0,8%. Der Absatz ohne Berücksichtigung von Autos stieg um 1,0% und übertraf damit die Erwartungen von -1,5%.Widerstandsniveaus: 0.6100, 0.6131, 0.6155, 0.6183.Unterstützungsniveaus: 0.6075, 0.6053, 0.6030, 0.6000.Analyse der GoldpreiseIn der asiatischen Handelssitzung zeigt das Währungspaar XAU/USD nach oben und versucht, über der wichtigen Marke von 2000.0 Fuß zu fassen. Dies geschieht vor dem Hintergrund einer vorübergehenden Waffenruhe im Nahostkonflikt, die die geopolitischen Risiken verringert, sowie aufgrund des anhaltenden Fallens des USD-Index.Experten diskutieren oft die Möglichkeit einer globalen Rezession in der US-Wirtschaft und die Zeit des Abschlusses einer aggressiven Finanzpolitik. Analysten der Goldman Sachs Group Inc. sie schätzen die Wahrscheinlichkeit einer Rezession auf 15% und gehen davon aus, dass die Korrektur der Kreditkosten im letzten Quartal des nächsten Jahres beginnen wird. Die UBS Group AG und Morgan Stanley prognostizieren im zweiten Quartal des kommenden Jahres die gleiche Entwicklung mit einer erwarteten Lockerung der Geldpolitik im März, wobei die Experten der UBS Group AG für 2024 eine Zinskorrektur von mehr als 275 Basispunkten erwarten. Unter solchen Bedingungen kann Gold Wachstum zeigen, da der Rückgang des USD-Index aufgrund der weichen Politik zu seinem Wachstum beiträgt, da die umgekehrte Korrelation zwischen Gold und Index gegeben ist, die auf ein normales Niveau nahe -0,80 zurückkehrt.Widerstandsniveaus: 2024.0, 2053.0.Support-Levels: 2000.0, 1965.0.Analyse des KryptowährungsmarktesDie letzte Woche für das Währungspaar BTC/USD war gemischt: Zunächst gab es einen Rückgang auf das Niveau von 35640.00, gefolgt von der Wiederherstellung verlorener Positionen mit Überwindung des Niveaus von 38400.00, aber zum gegenwärtigen Zeitpunkt fiel der Kurs wieder auf 37200.00.Dieser negative Trend ist mit einer verstärkten Kontrolle durch die amerikanischen Aufsichtsbehörden über die führenden Kryptowährungsplattformen verbunden. Zum Beispiel erkannte Changpeng Zhao, Leiter von Binance, die Unfähigkeit des Unternehmens, die Anforderungen des Anti-Geldwäsche-Programms einzuhalten, und trat zurück, wobei das Unternehmen mit einer Geldstrafe von 4,32 Milliarden Dollar bestraft wurde und zusätzliche rechtliche Einschränkungen auferlegte. Darüber hinaus hat die US Securities and Exchange Commission (SEC) die Kraken-Kryptobörse des illegalen Wertpapierhandels, der fehlenden Maklerlizenz und der Vermischung von Kundengeldern mit Unternehmensvermögen beschuldigt. Die Beamten bemühen sich, die Aktivitäten von Kraken vollständig zu verbieten und finanzielle Sanktionen zu verhängen. Auch Vertreter der Commodity Futures Trading Commission (CFTC) erklärten ihre Absicht, digitale Plattformen weiterhin zu verfolgen, wenn sie die Interessen ihrer Kunden nicht schützen.Widerstandsniveaus: 38000.00, 39062.50, 40625.00.Support-Levels: 35937.50, 35300.00, 32812.50, 31200.00.Analyse des RohölmarktesWährend der asiatischen Handelssitzung gab es einen moderaten Rückgang des Wertes von WTI-Öl, der auf das Niveau von 75.00 fällt, was den bärischen Trend der letzten Woche fortsetzt.Der Preisverfall kommt vor dem Hintergrund der abnehmenden geopolitischen Spannungen in der Region Nahost, wo im Rahmen des Abkommens über den Austausch von Geiseln eine Waffenruhe in Gaza eingeführt wurde. Einige Experten glauben, dass diese temporäre Welt zu einer diplomatischen Konfliktlösung werden könnte. Darüber hinaus erwarten die Anleger die Ergebnisse des für den 30. November geplanten bevorstehenden OPEC+ -Gipfels, bei dem die Exporteure über die Möglichkeit einer weiteren Reduzierung der Ölproduktion verhandeln. Analysten sind zuversichtlich, einen Kompromiss zu erzielen, der zu einer Verringerung des Ölangebots auf dem Markt führen wird.Widerstandsniveaus: 76.00, 77.00, 78.00, 79.14.Unterstützungsstufen: 75.00, 74.00, 73.00, ...
NZD/USD: New Zealand Dollar is close to peak valuesThe NZD/USD currency pair is experiencing a correction after the growth achieved last week, when it reached fresh highs since August 10. At the moment, the exchange rate is checking the 0.6060 level for the possibility of a decline, in anticipation of new incentives in the market.Today will attract investors' attention to the data on new home sales in the United States for October and the November business activity index from the Federal Reserve Bank of Dallas. Traders are likely to be cautious about taking new positions until Wednesday, November 29, when the Reserve Bank of New Zealand meets. It is expected that the bank will not tighten monetary policy and will leave the interest rate at 5.50%.The New Zealand dollar is slightly supported by retail sales data for the third quarter, published last Friday. These data showed stability after a 0.9% drop in the previous quarter, contrary to forecasts of a 0.8% decline. Sales excluding cars increased by 1.0%, exceeding expectations of -1.5%.Resistance levels: 0.6100, 0.6131, 0.6155, 0.6183.Support levels: 0.6075, 0.6053, 0.6030, 0.6000.Gold price analysisIn the Asian trading session, the XAU/USD currency pair is showing growth, trying to gain a foothold above the important 2000.0 mark. This is happening against the background of a temporary ceasefire in the Middle East conflict, which reduces geopolitical risks, as well as due to the continued decline of the USD index.Experts often discuss the possibility of a global recession in the US economy and the period of completion of aggressive financial policy. Analysts from Goldman Sachs Group Inc. estimate the probability of a recession at 15% and assume that the correction in the cost of loans will begin in the last quarter of next year. UBS Group AG and Morgan Stanley predict the same development in the second quarter of next year with the expected easing of monetary policy in March, and UBS Group AG experts foresee an interest rate correction of more than 275 basis points for 2024. In such conditions, gold can demonstrate growth, since a decrease in the USD index due to a soft policy contributes to its growth, given the inverse correlation between gold and the index, which returns to the usual level of about -0.80.Resistance levels: 2024.0, 2053.0.Support levels: 2000.0, 1965.0.Cryptocurrency Market AnalysisLast week was ambiguous for the BTC/USD currency pair: at first there was a decline to the level of 35640.00, followed by the recovery of lost positions with overcoming the level of 38400.00, but by the current moment the exchange rate has again fallen to the level of 37200.00.Such a negative trend is associated with increased control by American supervisory authorities over the leading cryptocurrency platforms. For example, Changpeng Zhao, the head of Binance, acknowledged the company's inability to comply with the requirements of the anti-money laundering program and resigned, while the company was fined $ 4.32 billion and additional legal restrictions were imposed. In addition, the U.S. Securities and Exchange Commission (SEC) accused the Kraken crypto exchange of illegal securities trading, lack of a broker's license and mixing client funds with corporate assets. The officials seek to completely ban the activities of Kraken and impose financial sanctions. Also, representatives of the Commodity Futures Trading Commission (CFTC) announced their intention to continue pursuing digital platforms if they do not protect the interests of their customers.Resistance levels: 38000.00, 39062.50, 40625.00.Support levels: 35937.50, 35300.00, 32812.50, 31200.00.Crude Oil Market AnalysisDuring the Asian trading session, there is a moderate decline in the price of WTI oil, which falls to the level of 75.00, continuing the "bearish" trend that developed last week.The drop in prices is taking place against the background of a decrease in geopolitical tensions in the Middle East region, where a ceasefire has been introduced in Gaza in the context of the hostage exchange agreement. Some experts believe that this temporary peace can turn into a diplomatic settlement of the conflict. In addition, investors are waiting for the results of the upcoming OPEC+ summit scheduled for November 30, where exporters are negotiating the possibility of an additional reduction in oil production. Analysts are confident that a compromise will be reached, which will lead to a decrease in the volume of oil supply on the market.Resistance levels: 76.00, 77.00, 78.00, 79.14.Support levels: 75.00, 74.00, 73.00, ...
USD/CAD: future trends will be determined by macroeconomic dataDuring the Asian trading session, the USD/CAD exchange rate remained stable, hovering around the level of 1.3715 ahead of the emergence of new key factors affecting the movement of the currency.Today, Canada is to publish data on consumer inflation for October. The annual index is expected to fall from 3.8% to 3.2%, with a slight monthly increase of 0.1%. According to forecasts, the core inflation index will remain at 2.8%. If the forecasts come true, the Canadian dollar may decline.In the US, investors' main attention on Tuesday will be paid to the minutes of the November meeting of the Federal Reserve System, where experts will look for confirmation of the completion of tight monetary policy and initial estimates of the time when it will begin to weaken. Approximately 30% of analysts believe that the first rate cut may occur in March 2024.Resistance levels: 1.3750, 1.3800, 1.3853, 1.3900.Support levels: 1.3700, 1.3650, 1.3600, 1.3550.USD/CHF: the "American" continues to decline due to an unsuccessful correction attempt a day earlierThe USD/CHF trading instrument resumed its decline after the previous attempt at a corrective recovery failed. The currency pair is currently checking the 0.8830 level for the possibility of further decline, updating the minimum values since September 1.Uncertainty around the potential termination of the policy of tightening monetary conditions by the US Federal Reserve continues to put pressure on the exchange rate. Some analysts suggest that the first interest rate cut may occur as early as March 2024, based on recent data on the slowdown in US inflation in October. The consumer price index fell from 3.7% to 3.2% year-on-year and from 0.4% to 0.0% month-on-month, while forecasts expected levels of 3.3% and 0.1%, respectively.Resistance levels: 0.8850, 0.8875, 0.8900, 0.8930.Support levels: 0.8824, 0.8800, 0.8756, 0.8730.Gold price analysisThe precious metal is strengthening significantly, playing back the previous uncertain dynamics of the last two sessions. The metal is trying to overcome the 1990.00 level, updating the highs since November 3, amid market discussions that the US Federal Reserve may have completed the current stage of raising interest rates. This conclusion was made by investors after analyzing US inflation data for October, where the consumer price index fell from 3.7% to 3.2% per annum, coming close to the upper limit of the Fed's target range. Approximately 30% of analysts are now considering the likelihood of the first rate cut as early as March 2024.At the same time, market activity remains moderate in anticipation of the minutes of the November Fed meeting, from which market participants expect additional signals on future monetary policy. It is also expected to publish data for October on sales volumes in the secondary housing market, where experts predict a decrease in the indicator from 3.96 million to 3.90 million.Resistance levels: 2000.00, 2015.30, 2030.00, 2050.00.Support levels: 1987.29, 1972.85, 1963.55, 1952.66.Crude Oil Market AnalyticsBrent Crude Oil prices fell to 81.94 on the news of a possible agreement by OPEC+ members to further reduce oil production at the upcoming meeting on November 26.Since September, oil prices have fallen by 16%, causing investors to worry about global energy demand amid the risk of increased hostilities in the Middle East. The situation worsened after data on China's GDP and trade balance were published, showing a decline in the country's economic growth from 6.3% to 4.9% on an annual basis in the third quarter.However, market participants also expect the outcome of the upcoming OPEC+ meeting on November 26. In their monthly report, the organization's analysts stressed the stability of the main indicators of the oil market, despite the "pessimistic mood", and confirmed their optimistic forecast for oil demand growth in 2024. Despite this, it is likely that OPEC+ will decide to reduce oil production, especially after reports from Reuters about such plans from Russia. However, experts believe that any new restrictions on production will only lead to a short-term increase in oil prices.Resistance levels: 82.50, 84.74, 88.03.Support levels: 78.27, ...
EUR/USD: the development of an upward price corridor in the range of 1.0730–1.0750 with dynamic boundariesThe EUR/USD currency pair continues to fluctuate in a negative way, retreating from the peak values recorded on September 13 and updated at the beginning of this week, now the rate is at 1.0689.The constraining factor for the euro is the deterioration of economic indicators, especially in Germany, where the September industrial production index decreased by 1.4% compared with a minimum drop of 0.1% in the previous period, and in annual terms the decrease reached -3.86%, which is noticeably worse than the previous indicator of -1.54%. The producer price index in the eurozone also slowed to 0.5% month-on-month after the previous 0.7%, and decreased by 12.4% year-on-year, which is more significant than the previous 11.5% decline. At the same time, the October data showed a weakening of inflation, with the consumer price index falling from 0.3% to 0.0% for the month and from 4.5% to 3.8% year-on-year. The harmonized consumer price index also decreased from 0.2% to -0.2% on a monthly basis and from 4.3% to 3.0% on an annual basis, which indicates the positive impact of measures taken by the European Central Bank to reduce monetary stimulus.Resistance levels: 1.0730, 1.0850.Support levels: 1.0638, 1.0465.GBP/USD: the British currency is moving away from the peak of September before the speech of the heads of the Fed and the Bank of EnglandThe GBP/USD currency pair shows a moderate decline, continuing the downward trend that emerged at the beginning of this week after moving away from the peak values recorded on September 15. The current trading focuses on the level of 1.2280, which is being tested for the possibility of a break down, while the early morning is characterized by low trading activity in anticipation of upcoming statements by the chairman of the US Federal Reserve Jerome Powell and the Governor of the Bank of England Andrew Bailey.On the eve of these events, the market estimated the October results of the Halifax housing cost index, which showed a monthly increase of 1.1% against the projected 0.2%, while the annual indicator decreased by 3.2%. The company's experts expressed the opinion that the semi-annual trend of housing cost reduction has been interrupted, but the current decrease in cost was more a consequence of a shortage of offers than a sign of market stabilization. It is expected that statistics on changes in GDP and industrial production for September will be presented in the UK on Friday, with a projected decline in national economic activity by 0.1% after an increase of 0.2% a month earlier. In the third quarter, the indicator may fall by 0.1%, while in annual terms, a slowdown from 0.6% to 0.5% is forecast. The manufacturing sector is expected to show an increase of 0.1% after the previous significant fall of 0.7%.Resistance levels: 1.2300, 1.2350, 1.2400, 1.2450.Support levels: 1.2261, 1.2230, 1.2200, 1.2150.Gold price analysisGold remains stable, hovering around the 1965.00 mark and approaching the minimum values on October 24. In the previous week, the metal could not stay above the key level of 2000.00, which led to the massive closure of long positions in the market.At the moment, investors' attention is focused on the upcoming speeches of the heads of the leading central banks — Andrew Bailey from the Bank of England and Jerome Powell from the US Federal Reserve. It is expected that they can provide additional information on future steps to adjust interest rates, which, according to some experts, have already reached their peak. At the last November sessions, both financial structures left the main parameters of their policy unchanged, but did not rule out tightening in the event of a return of inflationary growth. In addition, investors are expecting a speech by the President of the European Central Bank, Christine Lagarde, in the near future.Resistance levels: 1972.85, 1987.29, 2000.00, 2015.30.Support levels: 1963.55, 1952.66, 1940.00, 1930.00.Crude Oil market analyticsIn the Asian trading session, WTI crude oil shows a downward bias, being at $76.80 per barrel and reaching the lowest levels since July 24.Price indicators continue to experience downward pressure despite Russia's decision to extend the voluntary supply restriction by 300 thousand barrels per day until the end of this year, which is in addition to the already existing production reduction by 500 thousand barrels. At the same time, Saudi Arabia has expressed its intention to maintain restrictions at the level of 1 million barrels per day, and in December it is planned to conduct analytical monitoring to determine the future actions of producing countries. According to preliminary estimates, such measures may contribute to an additional reduction in supply in the market, which OPEC + is trying to balance against the background of declining demand. Weak indicators of the eurozone economy contribute to a reduction in industrial consumption, while China does not show a sufficiently strong pace of recovery in economic activity, although there is an increase in imports of raw materials by 7% in October after falling by 13% in the previous period.Resistance levels: 78.00, 79.14, 80.00, 81.00.Support levels: 77.00, 76.00, 75.00, ...
USD/CAD: the price is aimed at continuing the trend towards 1.3830In the previous week, the USD/CAD rate declined to 1.3650, but today the currency pair is showing growth, reaching the level of 1.3720 and aiming to test the bar at 1.3830.The depreciation was provoked by the results of the last meeting of the US Federal Reserve System on monetary policy: the key rate set at 5.25 to 5.50 percent remained unchanged, which was an expected decision against the background of a stable economic situation, a strong labor market and high inflation rates. Fed Chairman Jerome Powell stressed that the current dynamics of income on government bonds and mortgage rates may have an independent impact on the economy, which may free the regulator from the need to continue the "hawkish" policy. Therefore, analyzing the data of the FedWatch tool from the Chicago Mercantile Exchange (CME), it is predicted that with a probability of 90.0% the interest rate will remain unchanged in December of this year.Resistance levels: 1.3830, 1.3960.Support levels: 1.3650, 1.3510, 1.3385.NZD/USD: The New Zealand currency shows corrective changes in the exchange rateThe NZD/USD currency pair is showing an accelerated decline, following a downward trend against a microscopic perspective, while reflecting the recovery that was recorded at the end of the previous week. At the moment, the pair is testing the 0.5930 level for a breakthrough in the opposite direction, reacting to the latest statistics from China and the results of the recent meeting of the Reserve Bank of Australia, which, as a result, decided to raise the interest rate by 25 basis points to 4.35%. This change in rates may serve as an indicator for similar actions by the Reserve Bank of New Zealand at their meeting scheduled for November 29.The report on the Chinese economy showed a drop in export operations by 6.4% in October compared with -6.2% in the previous month, which significantly exceeded the forecasts of analysts who expected a decline of -3.1%. At the same time, imports unexpectedly increased by 3.0% after a drop of -6.2% recorded in September, contrary to forecasts that suggested a decrease of -5.4%. China's trade balance fell from $77.71 billion to $56.53 billion, although experts expected it to rise to $81.95 billion.Resistance levels: 0.5950, 0.5976, 0.6000, 0.6030.Support levels: 0.5920, 0.5900, 0.5879, 0.5858.Gold price analysisThe value of the precious metal is experiencing an upward correction, holding steady at the level of 1970.0. This is a consequence of the fact that investors prefer investments in safe assets against the background of geopolitical risks in the Middle East region.Not only private investors, but also national regulators have intensified their interest in acquiring gold as a reliable resource. The report of the World Gold Council (WGC) shows that in the period from July to September of this year, central banks increased their reserves by 337.0 tons, which is one of the most significant quantitative indicators of purchases in recent years. From the beginning of the year to the end of September, the total volume of gold purchased reached 800.0 tons, which is 14.0% more than in the same period of the previous year. Among the major buyers, the People's Bank of China stands out, having increased its reserves by 78.0 tons in the third quarter and by 181.0 tons since the beginning of the year. It is also worth noting the actions of the Central Bank of Turkey, which, despite the sale of 160.0 tons in the spring, acquired 39.0 tons of gold in the last quarter.Resistance levels: 1985.0, 2010.0.Support levels: 1960.0, 1933.0.Crude Oil Market AnalysisPrices for the Brent brand are experiencing an adjustment, fluctuating around the figure of $ 85 per barrel.The latest news indicates that the largest oil producers have decided to continue the pact on reducing oil production until the end of this year. Saudi Arabia will cut its production by 1 million barrels per day, while Russia will reduce production by 500 thousand barrels per day, with an additional export restriction of 300 thousand barrels. These steps taken by OPEC+ countries are aimed at stabilizing prices at the level of current indicators. In the third quarter, Saudi Arabia's economy showed a slowdown caused by hydrocarbon prices that did not meet expectations. In this regard, Riyadh plans to take measures to adjust its economic policy in the future.Resistance levels: 86.00, 89.30.Support levels: 83.70, ...
AUD/USD: annual inflation rate in Australia decreased to 5.4%In light of the strengthening of the US dollar, the AUD/USD pair is undergoing a correction at the level of 0.6365. Despite the weak start of the week, local growth has now been noticed.The fall was caused by low indicators of the Australian macroeconomics: the index of business activity in manufacturing decreased from 48.7 to 48.0 points, and in the service sector fell from 51.8 to 47.6 points. However, the latest inflation figures for the third quarter showed an increase in the price index by 1.2% compared to the previous 0.8%, but the annual figure decreased from 6.0% to 5.4%. This is primarily due to the reduction in the cost of durable goods and services, which had a positive impact on the Australian dollar in the short term.The US currency is approaching the level of 106,000 in the USD Index, thanks to statistics on business activity exceeding forecasts. The indicator in the manufacturing sector reached 50.0 points, soaring above the expected 49.5 points and the previous 49.8 points. In the service sector, the indicator showed 50.9 points against the predicted 49.8 points and the previous 50.1 points. These data supported the strengthening of the US dollar.Support levels: 0.6340, 0.6250.Resistance levels: 0.6430, 0.6520.NZD/USD: quotes tend to strengthen the uptrendDuring the Asian trading session, the NZD/USD pair shows moderate growth, continuing the weakly pronounced uptrend that began to form at the beginning of this week. The currency pair is approaching the level of 0.5850, waiting for incentives for further movement.Assumptions that the US Federal Reserve will maintain its current monetary policy next week and may postpone an interest rate hike until the launch of a monetary easing program next year create some pressure on the US dollar. This is confirmed by positive macroeconomic statistics: for example, the recent October index of business activity in the manufacturing sector from S&P Global was adjusted from 49.8 points to 50 points, which exceeded the expectations of analysts who predicted a decline to 49.5 points. And the indicator in the service sector increased from 50.1 points to 50.9 points, exceeding the forecast of 49.9 points.Resistance levels: 0.5858, 0.5879, 0.5900, 0.5920.Support levels: 0.5830, 0.5800, 0.5750, 0.5720.Gold price analysisOver the past two weeks, XAU/USD quotes have risen noticeably, reaching a peak at 1997.00, however, a correction has recently been observed, and they are currently set around 1968.75.The increasing trend was largely caused by the intensification of the military conflict between Israel and Hamas, which led to instability in the market and increased investor interest in safe assets. The current stage of consolidation is associated with uncertainty about the further development of the situation. The United States and some other states are working hard on a diplomatic solution to the conflict. With the success of these efforts, the value of precious metals may experience a decline. Nevertheless, at the moment the Israeli side is actively preparing a ground invasion of Gaza. If such a decision is made, it will significantly increase tensions in the region and may disrupt the current balance of power. In such a scenario, investors may again prefer gold as a reliable asset, which will increase its value.Resistance levels: 2000.00, 2031.35.Support levels: 1937.50, 1894.00, 1875.00.Crude Oil market analysisNorth American WTI Crude Oil is experiencing a correction and is trading at 83.52, reacting to information about China's new energy policy.China has decided to reduce imports of expensive raw materials from Saudi Arabia and the UAE, while increasing purchases of oil from countries under international sanctions, such as Russia, Venezuela and Iran. In September, the total volume of hydrocarbon reserves fell by 240.0 thousand barrels, while an increase of 1.32 million barrels was previously recorded. It is also worth noting that China is increasing the production of petroleum products, reaching an indicator of 15.48 million barrels per day and processing 63.62 million tons of oil in September. These products are intended for export to Asian markets.Meanwhile, oil reserves in the United States continue to decrease. According to the American Petroleum Institute (API), after a decrease of 4.383 million barrels last week, inventories decreased by another 2.668 million barrels. It is expected that today's reports from the Energy Information Administration of the US Department of Energy (EIA) will confirm this trend, the expected figure is a decrease of 1.168 million barrels.Resistance levels: 85.50, 89.50.Support levels: 81.94, ...
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 ...