Commodity market: features of gold trading

If you are tired of the most popular trading stocks or currency pairs, you can try your hand in the commodity market, however, it is necessary to understand its structure and to assess the dynamics of demand for a certain asset. The most common tool on the currency market is the oil, because its price depends on the demand, due to which it quickly restores the lost positions. In contrast to the popular brands of oil, such an asset like gold less flexible to market conditions.


Indicators of 2019, in the structure of global demand for gold, there are the following leadership position: investments - 29.2% and the jewelry was 48.5%. For a General understanding, the proportion of purchases of gold by Central Banks amounted to 14.8 percent, while, in industry and 7.5%.


The share of purchases of gold in the industrial sector is important, since silver is considerably higher. During a pandemic, COVID-19, silver against the us dollar fell compared to gold, the dollar and this led to the fact that the values of the two metals reached its historical maximum. Therefore, it is rational to assume that the recovery of the economies of the leading countries rely on the reduction factor and to rely on the faster growth of silver compared to gold.


The pricing of the precious metal is affected by changes in the structure of demand, which indicates the stability of the existing trend. After all, if there is a shift from the jewelry business, the market is now bullish sentiment. And the whole reason that precious metals are high in price, which significantly reduces their consumption. But it is worth noting that the faster growing inventory of specialized exchange-traded funds, the above quotations of their securities and more house buyers.


Often it happens that the rise in the price of gold occurs from East to West, as the share of China and India in the structure of consumption of precious metal in the sphere of jewelry in 2019 was 67%, while the ETF core located in the United States (including the largest Fund SPDR Gold Shares) and in Europe.


The main producers of gold are China (404,1 t), Australia (314,9 t), Russia (297,3 MT), USA (221,7 t) and other countries. The proposal's effect on price is limited. A typical example is 2013. Then many said that the quotations XAU/USD to fall below $1300-1350 / ounce, because that is where the break-even point for mining companies. They say they will cut production, which will lead to shortages and higher prices. In fact, existing technologies hedging allow firms to fix the price and to continue production in the same amount. Gold fell significantly below chastise customers for their confidence.

18 June, 2020

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