When we start considering the most precious assets in the financial market, gold is one of the first products that will come to one’s mind. Indeed, gold trading has been popular for millennia or even longer. Currently, when online gold trading is enabled, we usually find its quotes in USD (XAU/USD).
For years, the value of gold and its stability have been attracting traders and investors who wanted to mitigate the impacts of inflation. If you consider gold a safe haven in online trading, you are quite right. However, to succeed in it, you still need to be able to conduct advanced technical analysis. It’s suggested that this analysis should include not only research on current charts but on gold price history over decades as well. Why? Let’s figure this out.
Why Historical Prices of Gold are Important
Gold price history is a valuable piece of information that can be very useful for a market participant making his trading decisions. If you take a look and the gold price history chart right now, you’ll see that the value has been tending to move upward all the time. In 2011, the maximum point of around $2,000 was reached. Since then, the declining movement was prevailing until 2016.
Historical gold price charts also provide you with pieces of information about possible areas of price support to buy at. For instance, if you see that significant declines in gold prices, let’s say down to $1,200 per ounce, are met with a big buying pressure this means that the $1,200 area is a level of support. That’s why you can also consider buying gold when it’s in this area because such pressure may indicate the future reversal to uptrend movements.
It’s not always necessary to examine the historical gold prices chart that covers a hundred years. Depending on your strategy, you can analyze the history of gold prices within the last 30, 15, or 10 years. Also, you can find charts where gold is quoted in other currencies. Mainly, these are British Pounds, Euros, or Swiss Francs.
Why Gold Prices Change Over Time
There are many important factors that can push gold prices up or down. From historic price charts, we can see that dramatic ups and downs aren’t something extraordinary for gold. Such changes are often caused by inflation or geopolitical crises. Buying pressure by central banks of countries can also push the prices either up or down.
All economic factors are important in the financial markets. Nevertheless, in gold trading, currency values are the most powerful determinant. Since in most cases gold is quoted in USD, dollar weakening drives gold prices up for foreign buyers since the USD becomes not as expensive for them. And on the contrary, if the dollar becomes stronger for some reason, it becomes difficult for foreign buyers to purchase gold, which leads to the gold price decline. When fiat currencies are on a price downtrend, gold becomes more powerful and tends to gain more value over time. Gold’s ability to save investors from currency declining prices is one of the reasons why this commodity is considered a safe haven for investors from the long-term perspective. This metal is one of the best investment products to store value. From the historical gold prices chart, we can conclude that it’s unlikely that gold will lose this image in the nearest future.
Alongside the importance of gold price history, keep in mind that past performances might not always help predict the performances in the future. The analysis of historical prices is just one more important method you should use to obtain some market insights. Your final decision should be taken on the basis of the conjunction between the historical data and current market conditions.
Why Trade Gold
When we know what impacts gold prices and why historical data are important, let’s find out why we should even consider trading gold. The first thing you need to know is that gold is considered one of the most popular commodities for trading. The first reason why it is so is that this metal has unique properties, making it demanded by different industries. Gold is necessary for both electronic gadgets and jewelry production. However, the supply of gold is limited. From this, we can make a logical conclusion, that high demand and limited supply are the reasons why the asset holds a high value.
One more significant factor that motivates gold traders is that it’s one of the few products that tend to be more time on the rise. Of course, we cannot exclude market risks such as currency value fluctuations or global economic uncertainty. However, even if these factors are strong, we cannot deny the fact that gold tends to retain its value better than other financial products. Neither stocks nor fiat currencies cannot be as resilient to economic crises or disrupting geopolitical events as.
Considering all the aspects outlined in this guide, we can conclude that gold is a worthy product to be added to your trading portfolio. If you analyze its historical price data, you’ll be able to devise a strong and profitable long-term investment strategy and find a good haven from unsatisfying economic trends during periods of recessions.