Gold is a favorite asset among day-traders traders, and for good reason. The commodity has long been the go-to safe haven of the world, making it relatively easy to predict where it is headed moving forward. At the moment, there’s quite a bit of movement in the commodity, creating several opportunities for binary options traders. Today, we’ll talk about why gold is headed up and what traders should watch for ahead.
Reason #1 For Gains In Gold
As mentioned above, gold has been headed up recently, and for good reason. You see, at the moment, geopolitical tensions are high. In fact, there are two big geopolitical factors at play here, causing fear in the minds of investors and a push toward safe havens. They include:
- North Korea – Tensions between North Korea and the United States are running to an all time high. The long-standing feud between the two countries hit a boiling point last week as North Korea’s 105th anniversary of their founding President, also known as the Day of the Sun in the country brought more geopolitical unrest. In a massive parade on this day, the country unveiled what reporters are calling intercontinental missiles. Along with the unveiling of these missiles, top North Korea officials touted their ability to respond to any threat from the United States with a nuclear attack.
- Tension In The Middle East – Another major area of geopolitical concern at the moment is the Middle East. While areas like Syria, Afghanistan, and others have been on the geopolitical tension map for some time, the war in the region is heating up. In fact, the United States just dropped the biggest non-nuclear bomb in their arsenal on an Afghanistan tunnel system.
Ultimately, geopolitical issues can take a hefty toll on the market. Because of the increase in geopolitical tensions around the world, more and more investors are looking to gold in order to keep their asset values safe.
Reason #2 For Gains In Gold
Another big factor here is the US dollar. You see, at the heart of tensions in both the Middle East and North Korea, we find the United States. Ultimately, this is driving the US dollar downward. While that may be a bad thing for the country, it is a good thing for gold. After all, the commodity, like most others is priced using the USD. Therefore, as the USD falls, gold becomes more accessible in other nations as a weak USD means lower costs due to exchange rates. This is also helping to drive demand upward, leading to gains in gold.
What Traders Should Be Watching For
As is almost always the case, gold is likely to present several profitable opportunities for traders ahead. However, if you want to take advantage of these opportunities, you’ll have to stay on top of the news. In particular, pay attention to the topics that are leading to the gains we’re seeing in the commodity at the moment. Any changes in the geopolitical tension centered in North Korea and the Middle East will likely lead to movement in the value of the commodity. Also, keep a close eye on the USD. After all, historically, any movement in the USD will lead to movement in the opposite direction for gold.