XAUUSD Forecast

If you were not aware, XAU is the designated and internationally used code for gold. Most of the time, you will notice gold attracting a lot of attention from the market during times of economic uncertainty and turmoil. It is important to know this because it is a big part of the xauusd forecast forecast. The xauusd forecast news, especially when things are bad, is what drives predictions.

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Gold increases in value when the markets are volatile because of the intrinsic value it has. It is the ultimate safe haven, beating out the CHF (Swiss Franc) and the JPY (Yen). 

Just like other pairs, the trends are what will guide you and make it easy for you to execute successful xauusd forecast trades.

It is commonly known that for the best trades to happen, one needs to anticipate the trends and know what is happening in the markets. Just like everything else, the specific pairs in the markets have factors that affect them.

That is why you need to know the specific factors to keep an eye on and ensure that your results are accurate.

The forecast for the xauusd pair is done by looking at the economic times. Get premium live forex signals from our expert.

In this segment, we will tell you what the professionals look at when determining their xauusd forecast. That way, you will have a stepping stone that allows you to know where to get started.

XAUUSD Forecast: The History of the Euro to Dollar Rates

Gold is old. So old that we have been using it as currency since before we had banks or a complete global map. Gold is soft, dense, lustrous, malleable, ductile, and makes people go crazy just looking at it.

Governments all over the world hoard the stuff whenever they can get it. But they do not back their currency with it, for some reason. They used to do this, and it was known as the gold standard, but they do not do it anymore.

If the numbers are to be believed, only 187,000 tonnes have been mined in our planet’s history. 

The factors that affect gold prices are different in several ways compared to the factors that affect the normal currency. The U.S. dollar and gold, have a special relationship. To understand what xauusd predictions look like, you need to know how the USD and gold, stack up against each other.

The Relationship Between Gold and the U.S. Dollar

Gold is an asset and has intrinsic value, as we mentioned earlier. The value, however, tends to fluctuate over time in a wildly unpredictable fashion. The rule is simple, though: when the value of the USD increases in relation to other world currencies, the price of gold tends to go down.

The reason is that gold becomes more expensive for other currencies to buy. The demand and supply principles state that when a commodity price goes up, the demand goes down.

When the USD’s value down, the price of gold appreciates because it becomes cheaper in other currencies. Demand increases when prices decrease.

The USD is used by less than 5% of the world population. Thus, we cannot let that currency control everything and be the only thing that affects gold. It is a benchmark, yes, but other factors affect the price of gold.

The Way People Think, Affects XAUUSD Rates

There is always a psychological impact when it comes to gold. You are probably aware by now that paper money in itself is valueless. We imbue it with value by agreeing that it can buy this thing or that thing, and that’s it. As long as we agree, the money will have value.

However, paper money is susceptible to inflation and because it does not contain the value in itself.

If you went to buy a bag of rice and the guy selling it to you said he wanted a bag of some other food in exchange for the rice instead of paper because ‘I can’t eat paper,’ what will you do?

You see, it is that kind of thinking that tips people off to the fact that gold is value and currency is just paper or cheap metal (in the case of coins). Anyone will take gold, even if money lost all its value.

Interest rates are one of the things that affect the price of gold. Gold in itself does not yield interest and must compete with assets that do. In simple terms, other assets will have more demand because they can accrue interest rates.

Gold holds value in itself. It does not create new value. It is a way of storing value. Think of it as freezing a body in cryogenics, the way they do in Sci-Fi, for later.

If you can keep track of market sentiments, you will do the xauusd forecast with ease.

The Price of Gold Since Bretton-Woods

In 1944, the Bretton Woods agreement made the USD the official global currency and backed by setting the value of old at $35 per ounce. In 1968, the demand in gold went up, and Congress repealed the requirement that Federal Reserve Bills be backed by gold.  

From ’68 to ’71, the U.S. government spent quite a lot on the needless Vietnam war, underwent an oil crisis, and changed the dollar-gold parity quite a bit. In 1971, Richard Nixon said that the U.S. would not convert dollars into gold using the official exchange rates.

This was a temporary thing, but other countries had no interest in holding the USD and quickly depleted the U.S. gold reserves. The amount to buy an ounce of gold was raised to $38 in ’72.

The next year, it was raised to $42.22. The Bretton-Woods agreement came to an end, with the USD becoming a free-floating currency. By the end of 1974, the price of an ounce was $183. The panic in the Middle East, the Yom-Kippur War, growing oil prices all contributed to this.

In 1975, gold began trading for future delivery in the New York and Chicago exchanges. Finally, Nixon abandoned the gold standard for good in 1976.

1979 experienced the revolution of Khomeini in Iran, leading to another oil crisis, which pushed gold to $678 in 1980.

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By September 1980, gold was still at $675, but Reagan solved many of the U.S.’s economic issues. The Fed successfully ended inflation with a double-digit interest rate, which led to a recession.

Cut to June 1999, and gold was now 4256 an ounce. Those who trusted gold were rewarded when it hit $338 when an agreement was reached to limit gold sales, co-signed by 15 European central banks.

From 2003-2004, gold broke the $400 level, with many investors buying it as risk insurance for their portfolios.

By April 2006, gold had surpassed the $600 mark and in two years, reaching $869.75 per ounce during the ’08 financial crisis. The months that followed the recession saw it cross the $1,000 mark for the first time in the history of the United States’ future market.

September 2010 came around, and for five consecutive sessions, gold was peaking at $1,296.10. By December, it hit a record high of $1,425 an ounce.

Since then, gold had gone as high as $1,895 in September 2011, when people worried that the U.S. would default on its national debt. The prices have since fallen to $1,110 per ounce because of improvements in the U.S. economy.

Most recently, the prices have reached $1,287. At the time of writing this (September 20, 2020), the price was $1,934 per ounce. The price is probably that high because of the Covid-19 pandemic.

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