Often referred to as the “safe haven” asset, gold exhibits a different set of fundamentals in the forex market than traditional currency pairs. Gold (XAU/USD) independently moves in line with global economic confidence, inflationary measures and the strength of the US dollar. Gold tends to rally as investors seek for protection from risk in response to economic fears or inflation – and declines when the US dollar strengthens or when interest rates move higher, given it has no yield. 

Forex traders will use gold as a hedge and diversify their positions in portfolios capitalizing for strong price swings. 

By understanding macroeconomic releases, Federal Reserve direction and further geopolitical tensions, traders are able to forecast gold direction. The point is trading gold not only uses chart analysis but also an informed awareness of the macroeconomic pulse of the world – where technical analysis meets global psychological consciousness.