It takes market knowledge, smart use of technical analysis, as well as an eye for global economic factors to spot such trading opportunities in precious metals. These traders come to understand that being able to pinpoint the precise moment to enter or exit a position can swing the odds in their favor or go against them. Follow along for a few strategies and take away to find a profitable market opportunity.
The most important thing as far as precious metals trading goes is the movement of the US dollar. The main currency through which precious metal are traded is dollar and the gold and silver are often priced in dollar. This is because if the dollar weakens then precious metals tend to gain since those who buy them with other currencies view them as cheap. However, precious metals may fall when the dollar strengthens. By watching U.S. economic data and Federal Reserve policies you can see what direction the dollar is going and from that what direction precious metals may move.
The other key variable that should be considered is inflation. Commentators have traditionally regarded precious metals as a hedge against inflation. Modeled after a government issued Fiat currency, the value of paper currencies drops with higher inflation levels, the tendency being for investors to turn to gold and silver as a store of value. By watching inflation data and understanding how it can impact the economy, you can predict when precious metals may begin to rise in price. When inflation rises, trading opportunities in precious metals may increase as traders turn to safe-haven assets.
Technical analysis is also a great tool to detecting trading opportunities. With regards to joint price chart, traders can quickly see patterns and trends which indicate the potential entry and exit points. Precious metal support and resistance levels, moving averages and other technical indicators can indicate when a precious metal is poised to reverse or keep going. For example, if gold is at a strong support level and is moving upward, it could be a good opportunity to buy. On the other hand, if a metal is near resistance and fails to break through, it may indicate that the price movement is nearing its end, signaling a good time to sell or wait for a better entry point.
In addition, there are opportunities trading precious metals on global geopolitical events. Financial markets tend to become uncertain during crises such as wars, natural disasters, or political instability. Precious metals are a safe haven asset, investors flock to such assets when such times are on. Monitoring geopolitical developments will give you some clue of times when precious metals could witness heightened demand on the market.
Lastly, precious metals trading calls for an eye on supply and demand dynamic. Much like gold, silver, platinum, and palladium are all finite resources, they too have the potential for prices to shift due to changes in supply. For example, if mining operations are disrupted or a significant new discovery changes the supply of a certain metal, its value may rise or fall. Being up to date on supply side variables can help you see around corners that predict the movement of the market.
Combining these strategies and staying informed on what drives precious metals prices will help you know when you have a trading opportunity. With precious metals trading, whether it is to make short term gains or long term investments, knowing the market and using some tools like technical analysis will definitely help you navigate through the shadiest of efforts.
