How to Analyze and Predict Gold Investment According to the Price

Gold is one of the investment instruments favored by the public. In fact, gold has been used to store wealth for more than 3,000 years.

This is because gold is very rare and even today, gold is becoming an increasingly difficult commodity to mine. Gold investment is also often used as a safe haven or hedge to avoid inflation.

The price of gold can go up or down every day. So that you can choose the right time to buy or sell gold, you should do an analysis first.

In addition, you also need to know what causes gold price movements to support the results of your analysis.

How to Analyze Gold Prices

There are two ways you can do to analyze the price of gold, namely technical analysis and fundamental analysis. The following explanation is summarized in Finansialku.com.

1. Technical Analysis

Technical analysis is an analysis that uses several types of charts and looks at patterns that occur, for example candlesticks, trend lines, and others. In this analysis, you will see gold price movements through the charts on the trading platform and try to form certain patterns to help you predict the market.

Now, you can monitor gold price movements in real time. It's easy! You can trade GOFX spot gold contracts on the ICDX (Indonesia Commodity and Derivatives Exchange) commodity exchange through the MetaTrader 5 trading application, which is used by professional traders around the world.

2. Fundamental Analysis

For fundamental analysis, you are required to diligently read any news information related to gold.

The movement of gold prices, one of which is influenced by economic phenomena that occur in a country. For example, rising interest rates, currency exchange rates, and the economic downturn in major countries.

Causes of Gold Price Movements

So that you can predict gold price movements, here are some indicators that you need to pay attention to.

1. Global Conditions

Economic conditions or geopolitical events that occur in the world often affect the price of gold in the world, for example, the United States presidential election. The election of Biden made the market optimistic about the US government, so the value of the USD rose.

When the USD value rises, the market usually tends to switch away from 'safe' assets like gold. This falling demand makes the price of gold decline.

2. Gold Supply and Demand

Like the law of supply and demand for gold in general, if the demand for gold is higher than the supply of gold, the price tends to rise. Meanwhile, if the supply is higher than the demand, then the price tends to fall.

Until now, there is no definite figure about the amount of gold precious metal that exists in the world and can be mined. Based on the first version from Thomson Reuters GFMS, the number reached 171,300 tonnes. Meanwhile, the second version from James Turk, the founder of Gold Money estimates that the number reached 155,244 tons.

There is an opinion that the discrepancy is an attempt to obscure the actual amount of gold stocks. In the absence of certainty about the amount of available gold, the market will continue to be interested in gold, thus keeping gold prices stable.

3. United States Dollar Exchange Rate

Domestic gold prices refer to international gold prices converted from US Dollars. Therefore, the price of gold is also influenced by movements in the US Dollar exchange rate.

The relationship between the two is opposite. If the US Dollar strengthens, then the price of gold tends to fall, as in the example in the first point. Vice versa, if the US Dollar exchange rate weakens, the price of gold tends to rise.

4. Inflation

The higher the inflation rate, the more expensive the price of gold. This is because when there is inflation, the value of money decreases.

By doing so, people are looking for other, more valuable alternative means of exchange, such as gold.

5. Interest Rates

One of the benchmarks when it's the right time to buy or sell gold is to look at interest rates.

When interest rates rise, gold prices tend to fall. Meanwhile, if interest rates weaken, the price of gold tends to rise. This is because if interest rates are high, then people are interested in saving their money in the bank.

The Right Time to Invest in Gold

To analyze gold price movements, you can use technical analysis, fundamental analysis, or both. This analysis can be supported by an understanding of the causes of gold price movements.

If you are investing in gold for the long term or as a safe haven, then you can start investing in gold from now on, because the value of gold tends to increase in the long term. For example investing in physical gold.

However, if your goal is for short-term investment and don't want to be bothered with physical gold storage, you can trade GOFX spot gold contracts multilaterally on the ICDX commodity exchange.

Even better, with the GOFX Micro Gold Spot Contract (1/100 of the standard contract size), you can trade with much more affordable capital, starting from just IDR 500,000.

Don't worry about security, because GOFX trading takes place on the ICDX exchange which is a regulated exchange, registered and supervised by BAPPEBTI (Commodity Futures Trading Regulatory Agency) under the Ministry of Trade.