Gold Sees Big Rally

Binary Options University May 10, 2016 Trading the Gold Rally

Gold Rally is in Play – Now What?

Experienced Forex traders often look to the price of gold, even though they might never trade the precious commodity. They do this because gold is often a good indicator as to the general sentiment that the trading community has toward the U.S. dollar. Right now, the sentiment toward the greenback is fairly negative, and gold is definitely showing this. The price per ounce has increased to up over $1,300, the highest it has been in a few years. Whether or not this upward momentum will continue remains to be seen, but right now, it seems like a smart decision to be long on gold, and short on the USD.

Looking now at the Forex market directly, we see big factors pushing the dollar downward, especially in Japan. The yen is showing strength that it hasn’t seen in a while thanks to a weak Japanese stock market, and the weak dollar is creating a nice scenario where the direction is pretty obvious. As Japan’s stocks stumble, the yen becomes more and more attractive, and the weakness of the dollar is helping to make the yen even more powerful. Of the three other major currencies, the yen is the most predictable against the USD thanks to turmoil in Europe. The euro and the British pound sterling are gaining momentum, but thanks to talks of England leaving the EU, there is not enough reliability or strength here to make these trades as strong as trading the USD/JPY pair. As the Federal Reserve waits to make a decision on how to help the U.S. economy, investors are finding opportunities elsewhere, further driving down the value of the dollar.

Some analysts are now saying that gold could go as high as $1,400 per ounce pretty quickly. For those that focus just on the Forex market, this alone is a good indicator that going short on the U.S. dollar is looking more and more attractive. Many traders find that consolidating their trading allows them better access to profits here. For example, instead of using both a commodity futures broker and a Forex broker, you can gain access to both types of assets through a binary options broker, trading exclusively there, or by adding it to your trading strategy in order to take a more well-rounded approach to securing profits. It adds a lot of ease to your trading day, and it adds a sort of safety cushion by spreading your risk out a bit. It’s not right for everyone, but many traders can make more money this way than any other, and that’s a good reason to check it out if you haven’t already.

Be warned though. Many other analysts are saying that this is just a momentary peak, and that a correction to gold is coming soon. If that does happen, there is an inverse correlation between gold and the USD, which means that there is a good chance that this would send the dollar up higher against other currencies. The one major currency where this is least likely to happen is the yen, granted that the Japanese economy doesn’t see any major changes in the direction that it is currently heading. It’s important to keep abreast of the news and the fundamental data coming out of the countries that can influence currency prices regardless of how you are trading. Executing the wrong trades will lose you money regardless of whether you’re going through a Forex broker or a binary options broker. To get the most accurate information, it’s important that you refresh your news sources a few times per day, or subscribe to a streaming news service so that you are never making uninformed decisions.

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