News

Impact
on SPOT GOLD
Trading

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News Impact on
SPOT GOLD Trading

OVERVIEW

For many decades, trading gold was not

common because investors had to buy
and sell the metal itself. As time
progressed, Futures and Options
opened up and allowed investors to take
positions without actually ending up
with a safe full of bars, coins or jewelry.
Succeed the introduction of Gold
Exchange-Traded Funds (ETFs) in the
investment market made it easier as
trading stock.

Today, trading gold getting more and

more common as it can be traded like
currencies.

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News Impact on
SPOT GOLD Trading

When Gold can be traded on Forex

platform, it gained its popularity
because the trading platform used by
Forex trading is quite user friendly and
easy to master.

It is simply a matter of buying or selling

depending on whether you think that
the Gold price is likely to rise or fall.
What's more, due to the leverage system
in Forex trading, traders with only a few
hundred or thousand dollars can trade
Gold online most cost-effectively. Since
it is virtually identical to trading
currencies, which are nowadays, many
Forex traders also involved to trade in
GOLD from the comfort of their trading
platform.

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News Impact on
SPOT GOLD Trading

Most Forex brokers offer two types of

gold to their traders, i.e. Spot and
Exchange. In terms of price and how you
trade, not much difference.

Spot (usually under the symbol GOLD),

refers to the spot price of the metal on
the commodity.

Exchange, it’s quoted in dollars, and

often the price people mean when they
are talking about the price of gold.
Exchange refers to a “cross” between
gold and a currency, as if it were a
currency pair. For example, XAU – the
symbol for gold – quoted in US dollar
(USD) would be XAUUSD on the MT4
platform.

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News Impact on
SPOT GOLD Trading

Sources - https://www.gold.org/goldhub/data/gold-prices

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News Impact on
SPOT GOLD Trading

The Basics of GOLD –

XAUUSD
Asset symbol: XAUUSD
A spot commodity based on the price of
gold and traded against US dollars.

Pip Value

For gold or XAUUSD, 1 pip has a value of

0000.01 for 5 digits' brokers. If we trade
Gold on the MetaTrader platform, 1
micro lot trading size for 100 pips is $1. If
we buy 1 micro lot from 1693.00 to
1694.00, it is $1 or 100 pips. If we buy 1
mini lot from 1693.00 to 1694.00, it is
$10 or 100 pips. If we buy 1 lot from
1693.00 to 1694.00, it is $100 or 100 pips.

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News Impact on
SPOT GOLD Trading

The Spread
This is the difference between Ask price
and bid price. The difference in price is
the cost charge to traders when a
position is open and close. Different
broker offers different spread. However,
the common range of spread for
XAUUSD is in ranging from 4 to 10 pips.

The spread is 50 pips

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News Impact on
SPOT GOLD Trading

Orders
Direction wise, there are two types of
trades: Buy or long positions are opened
at ask price and

closed at bid price; Sell or short

positions are opened at bid and closed
at ask. Each of those can be opened
either as a market or as a pending order.

Closing order is always opposite to the

opening one, that is, by closing a long
(buy) position you sell the amount back
and vice versa - when you close a short
(sell) position, you buy the amount you
previously sold.

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News Impact on
SPOT GOLD Trading

Unlike invest in physical Gold, an

investor only can make profit when the
price is up, traders who trades Spot Gold
can make profits either by open a BUY
position or SELL position if the direction
he or she predict is correct.

A position can either be closed manually

at the current market rate or when a
certain price level is reached, through
Stop Loss and Take Profit orders.

Stop loss, or commonly described as SL,

is intended to limit the losses and is set
above the open price for short positions
and below the open price for long
positions.

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News Impact on
SPOT GOLD Trading

Take profit, commonly described as TP,

allows the traders to close a position
when a certain profit is gained. Take
profit level is below current Ask price for
a short position and above current Bid
price for a long position.

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News Impact on
SPOT GOLD Trading

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News Impact on
SPOT GOLD Trading

SPOT GOLD & Economic Data

Trading Spot Gold is rather simple than
trading currency as elements that impact
the price movement of spot gold is much
lesser than currency.

The key contributor to the impact on spot

gold price movement comes from US’s
economic data and international major
events.

Once trader mastering the above-

mentioned topics, and equip with some
technical indicators that related to Spot
Gold, you may confidently start a trading
career in spot gold trading.

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News Impact on
SPOT GOLD Trading

Forex-focus Economic
Calendar
An economic calendar is a resource that
allows traders to learn about important
economic information scheduled to be
released. The calendar graded the key
indicators into 3 categories, i.e. High, Med
and Low impact data, depending on their
likely degree of market impact.

Source: https://www.forexfactory.com/calendar?week=this 13
News Impact on
SPOT GOLD Trading

As a Gold trader, it can be very helpful to

know the date of the next key indicator or
major news announcement. For Gold
trading, High and Med impact data is
critical to the Gold price movement.

There are many websites providing the

Forex-focus Economic Calendar for the use
of traders. Those famous websites like
Forex Factory, Investing.com. and
myFxbook are the common choice for the
forex traders.

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News Impact on
SPOT GOLD Trading

High Impact Economy Indicators on Gold

1. Interest Rate Decision Impact on Gold

The interest rate decision made by the

central bank during their regularly
scheduled monetary policy meeting is in a
monthly basic. Each central bank sets
interest rate policy by establishing a
deposit rate or borrowing rate for
commercial banks in that country. This
event is the most widely watched event,
and a surprise can generate a huge
volatility.

Gold price will goes down if Interest Rate is

up.

2. NFP Impact on Gold

The Non-Farm Payroll Report is the

headline U.S. employment release that 15
measures the net gain in employees
News Impact on
SPOT GOLD Trading

2. NFP Impact on Gold

The Non-Farm Payroll Report is the

headline U.S. employment release that
measures the net gain in employees
measured during a corporate survey. The
report does not include farm workers,
private household employees, or Non-
Profit Organization employees. The report
is released by the Department of Labor and
is separated from the household survey
report. On the first Friday of every month,
NFP is released to the market and is
considered the most important economic
data with huge impact to currencies and
Gold.

Gold price will goes down if NFP is good.

3. CPI Impact on Gold

The Consumer Price Index measures a 16

country’s inflation, where it reveals changes
News Impact on
SPOT GOLD Trading

3. CPI Impact on Gold

The Consumer Price Index measures a

country’s inflation, where it reveals changes
to prices directly affecting the consumer.
The inflation index is calculated by
averaging the changes in prices of a
weighted basket of goods and services and
comparing that change to a prior period.
Items that are focused on include home
prices, rents, energy, and food.

Gold price will goes down if CPI is up.

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News Impact on
SPOT GOLD Trading

4. GDP Impact on Gold

Gross Domestic Product is the total value of

goods and services produced by an economy.
To calculate the GDP, you may add total
consumption, plus investment, and government
spending to the difference between exports and
imports.

Gold price will go down if GDP is good or better

than expected.

5. ISM Impact on Gold

The Institute for Supply Management (ISM), is a

leading supply management institute in U.S.
ISM publishes monthly ISM Report on Business.
ISM index reports are constructed to reflect the
status of employment, business activity,
production inventories, new orders and supplier
deliveries. ISM will cause high impact to gold
price as the data in its monthly release are used
as a popular economic indicator and forecaster.
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Gold Price will goes down if the ISM is up.

News Impact on
SPOT GOLD Trading

6. PMI Impact on Gold

The Purchasing Managers Index measures

the economic health of the manufacturing
sector. The data is collected through a
survey of 400 purchasing managers in the
manufacturing sector and based on five
different fields: Production, new orders,
inventories, Supplier deliveries and
employment level. The PMI can provide
information about the business condition.
The PMI provides analysts, purchasing
managers and company managers with the
current economic activity.

Gold Price will goes down if the PMI is up.

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News Impact on
SPOT GOLD Trading

7. QE Policy

Quantitative easing (QE) is a form of

monetary policy used by central banks as a
method of quickly increasing the domestic
money supply and spurring economic
activity.

Quantitative easing usually involves a

country's central bank purchasing longer-
term government bonds, as well as other
types of assets, such as mortgage-backed
securities (MBS).

Gold Price will goes up when QE is initiated.

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News Impact on
SPOT GOLD Trading

8. Major World Events Impact on Gold

Besides US Economic performance, Gold

Prices also have great impact when there is
an International crisis, disaster, war or other
major political events happen. This is
because during times of uncertainty, more
people turn to investing in gold because of
its enduring value. Gold is always have a
great demand because often considered a
"safe haven" for investors during turbulent
times.

Gold Price will goes up during uncertainty.

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News Impact on
SPOT GOLD Trading

How Global Events Affect the Gold Price

Financial Earthquake Capture of Troops
Tsunami In Japan Bin Laden Withdrawal
from
Afghanistan
Date 2008.9.15 2011.3.11 2011.5.2 2011.6.23

Impact on Up Up Down Down

Gold Price
Period 2008.9.15 2011.3.17 2011.5.2 2011.6.23
to to to to
2008.9.29 2011.5.2 2011.5.5 2011.7.1

Days 14 days 45 days 4 days 9 days

Affected 764.2 to 1387 to 1575.1 to 1548.5 to

Price 926.7 1575.1 1462.4 1477.90
Range
Affected 1625 1881 1127 706
Price in
Pips

From the table, we can draw the following key points:

Compared with global political issues, wars and

disasters have a greater impact on the gold price
How long the gold price reacts is directly proportional
to the extent of the event; that is, the longer the event
lasts, the longer the gold price fluctuates.
Each round of major events causes the price of gold to
fluctuate between about 1500 pips.
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News Impact on
SPOT GOLD Trading

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 News Impact on
SPOT GOLD Trading

CONCLUSION

In today’s modern world, we have to make our money

grow in value as inflation can make our money
depreciated in value in time to come. That is why
people keep on looking for alternatives in the
investment channel.

Amongst the many options available to the public

today, gold has become a popular tool that can help
people make money to hedge against the effects of
inflation, provided that they can be traded profitably.

There is a popular saying: “Trading is simply the

transfer of wealth from those who don’t know to those
who know.”

That’s right, you have to be smart and be prepared by

getting to know all the practical knowledge before
stepping into the Gold trading world. Good luck!

DISCLAIMER: This e-book is composed of personal opinions and ideas. The information and trading
strategies contained in this eBook is for educational purposes only. All effort has been executed to
present accurate, up-to-date, reliable, and complete information. The content should not be
construed as containing any type of investment advice and/or a solicitation for any transactions.
It does not, Implies an obligation to purchase investment services, or do it, Guarantee or predict
future performance.

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