How to Read a Gold Price Chart

If you have never read a gold price chart it can look quite complicated. Here is a great webinar that demystifies reading the charts.

Gold is the basis of the monetary standard for the International Monetary Fund and the Bank for International Settlements. Central banks around the world play an important role in the price of gold, which reflects the relative strength of the currency in which it is quoted. Most importantly, consumer sentiment and speculation heavily influence the price of gold. A gold price chart reflects much of this and shows up to the minute prices and trends.

Using Charts to Track Gold Prices

Gold price graphs and charts are used to look for patterns, which assist in predicting or speculating the future price of gold. These predictions make it possible to profit from those price moves. Study of the charts is critical in the technical analysis of gold price trends. This includes analysis of chart patterns, moving averages, market trends and the economic cycle. Gold traders and gold investors around the world use charts to look for uptrends and downtrends. When a downtrend is broken, it is a good time to buy. When an uptrend is broken, it is a good time to sell.

There are a number of gold price charts available. Many can be customized to reflect specific time periods as well as comparisons with other commodities. The chart shows the price of gold in the desired currency, of a certain weight of gold, over a certain amount of time. The value of the currency used to purchase the gold is very important. The price may be shown as a current spot price, which is often updated each minute or as the London gold fixing price, which is set twice each day. The chart tracks the price over a day, weeks, months or years. Supply, demand and speculation drive the gold price. Demand has a strong effect on the price of gold. In addition, short selling and trading in futures markets greatly affects the price of gold. Charts are used to look for trends as can be viewed in the video above. They are also used to track the price of gold as compared to the price of stocks, other precious metals or oil.

Spot Price and London Gold Fixing

A spot gold price chart shows the most recent price based on the average bid price offered by professional traders worldwide. Two important spot charts are the New York Spot Gold and the 24 Hour Spot Gold. The spot chart tracks the changing intraday spot price from over the counter gold markets worldwide. The London gold fixing price chart determines the price at which the market is balanced, by matching the buy and sell of the five member bullion trading firms or fixing brokers. This is done twice a day for the London AM and the London PM prices and is the most common benchmark for the price of gold. One can use multiple charts tailored to the needs of the individual and the different types of gold investments such as bullion, coins, certificates, exchange traded funds, gold mining stock and derivatives.

The Importance of Tracking the Gold Price

Tracking the gold price through gold price graphs and charts is important for a number of reasons. Supplies of gold are limited, central banks cannot create it and demand fluctuates rapidly. Interest rates are closely tied to gold, and the price of gold often correlates closely to crude oil prices. The gold price reflects the inherent price of the gold along with the relative strength of the currency in which it is quoted. Gold is often in demand because of consumer sentiments and because it is perceived as a hedge against inflation, economic turmoil, deflation, political crisis and currency devaluation.

A gold price chart must be used to track the price of gold and to analyze trends. The macroeconomic landscape must be taken into account to analyze economic indicators around the world, including inflation, interest rates, growth in gross domestic products, energy prices, stock prices and productivity. One must take into account global supply of gold, change in demand and the volatility of gold prices. Graphs and charts will help you do that.

Author: David Kennedy Google+