Gold is considered a safe-haven asset because of its low volatility, making it a low-risk investment option. During economic uncertainty, gold has become a popular investment option for people. The price of gold is constantly fluctuating due to various factors and news. This article will discuss the news that affects the price of gold. Economic news has the biggest impact on the price of gold. For example, if the price of gold shows a positive trend, investors will be more confident. However, if the price of gold drops, investors may turn to other investment options.
Getting to Know Gold
Gold is a valuable commodity and a type of metal that has been in demand for a long time. Since the 2008 financial crisis, people have regarded gold as a safe-haven asset with low volatility during economic uncertainty. It is often used as a tool for wealth preservation or investment, as its value is comparable to currency.
The Popularity of Gold as a Safe-Haven Asset
In the past, gold was popularly used to display power and wealth. Later on, gold was used for trading until it became an important component of the global financial system. Its weight was used as a reserve currency, known as the gold standard, which originated in 1850. The first country to adopt the gold standard was the United Kingdom, which pegged its currency to gold. The gold standard helped stabilize international finance during a relatively peaceful period in the world. As countries began to expand and the world entered World War I, the gold standard collapsed in popularity. However, gold continued to play a crucial role in currency exchange.
News That Has Positive Impacts on the Price of Gold
News that has a positive impact on the price of gold involves events that increase uncertainty or decrease confidence in the economy, leading investors to turn to gold as a safe-haven investment. Examples of such news may include:
- News of a war involving a major world power
- An increase in the number of people seeking unemployment benefits
- A decrease in non-farm payrolls
- A decrease in the GDP of a country
- A negative close of the US stock market index.
News That Has Negative Impacts on the Price of Gold
News that has a negative impact on the price of gold involves events that increase confidence in the economy or suggest a reduction in the demand for gold. Examples of such news may include:
- The Federal Reserve or the US central bank raises interest rates
- A decrease in the number of people filing for unemployment benefits
- Non-farm payrolls or jobs outside of the agricultural sector increase
- An increase in the country's GDP or gross domestic product
- The US stock market closes in positive territory.
Conclusion
As mentioned earlier, news can positively and negatively impact the movement of gold prices. For example, news such as Non-Farm Payrolls or FED's decision to increase interest rates can have both positive and negative effects on the price of gold. However, investors should closely monitor news and information in detail in order to make informed decisions when trading gold.
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Updated
1 year ago
(Apr 21, 2023 17:11)
