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[Vlad RF]

Gold Price Forecast for 2023: Analyzing the Potential for Continued Growth

Author : Andrey Goilov

Dear Clients and Partners,​

As at the time of writing, the price of gold dropped by more than 8% from its all-time high of 2,081 USD per troy ounce, which was recorded on 4 May 2023. However, investors are not losing interest in the precious metal. In addition, record purchases by central banks over the past year give hope for a further potential rise in the asset price.

Today we will talk about the current price of gold, how prices have changed in the past and what values they can reach over the next few years. We will examine the main factors affecting the fluctuations in the gold price, specify drivers of possible growth of its quotes, and carry out a technical analysis of the price chart.

How did gold prices change earlier?

Gold was discovered by the ancient Egyptians over 4,000 years ago. They used it to create jewellery and religious items. For the Romans, gold was a symbol of status and power, and it was used to decorate crowns and statues. In the Middle Ages, gold coins were the main means of trade and international exchange. In later periods of history, this metal became the basis of the monetary system.

During the period of the gold standard, since 1887, the US government fixed the gold price at 20.67 USD per troy ounce. Following the abandonment of the gold standard and dollar devaluation in 1933, the cost of the ounce increased to 35 USD and remained at this level until 1967.

In 1971, US President Richard Nixon finally abolished the gold backing of the US currency, which resulted in a significant increase in the value of the precious metal. In the early 1980s, the price reached a record level of 850 USD per troy ounce, but over the next nearly 20 years, it was steadily going down.

Gold started to rise in price in 2001 amid financial crises, geopolitical tensions, and market uncertainty, with the quotes hitting a new all-time high of 1,920 USD in 2011. From 2012 to 2016 inclusive, the quotes went down to 1,000 USD. Since mid-2018, the prices resumed their upward movement and reached the level of 2,075 USD in 2020, hitting a new record high of 2,081 USD in 2023.

Why invest in gold

• Hedge against inflation. The reserves of this resource and its mining are limited, and therefore its value grows during periods of high inflation when fiat currencies are rapidly depreciating
• Reserve asset. During periods of instability, financial and geopolitical turmoil, investors invest in gold to protect their investments from risks and maintain stability
• Portfolio diversification. Adding gold onto a portfolio reduces the overall risk level for the investment portfolio, as gold prices are characterised by a low correlation with the value of stocks, bonds, and other assets. Conditions are being created to mitigate portfolio volatility

The main drivers of gold prices in 2023

Central bank purchases

According to the World Gold Council (WGC), demand for gold from central banks hit an all-time high in 2022, amounting to 1136 tonnes. This is the highest reading over the entire history of monitoring since 1950. Already in the first quarter of 2023, the demand from central banks reached a level of 228 tonnes, which is 176% higher than in the first quarter of the previous year.

According to the data obtained, experts expect an upward trend in demand to persist throughout the year. The WGC survey showed that 24% of central banks are ready to increase their gold reserves in the near future, which can lead to a rise in gold prices.

Jewellery demand

According to the WGC, the fourth quarter of 2022 saw heavy demand for gold jewellery – over 630 tonnes. In the first quarter of 2023, the demand increased by 1% to 448 tonnes compared to the Q1 2022 statistics.

Despite the overall aggravation of the global economic environment, jewellery production and consumption remain at a high level, with the demand over the past ten years ranging between 840 and 2,100 tonnes a year.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

How to Use EIA Oil Report in Trading

Author : Victor Gryazin

Dear Clients and Partners,​

This overview is devoted to the weekly EIA report about the situation in the oil market that influences the quotations of black gold quite a lot. Many traders keep a close eye on this publication and use the information in trading.

What is the EIA report

Energy Information Administration (that EIA stands for) is a department of the US Ministry of Energy created in 1977. It is responsible for objective collection of energy data, analysis, and economic forecasts. The department regularly publishes various reports on the topics around energy. Among them, there are reports on energy carriers reserves, demand for them, and prices.

The United States are not only the largest consumer of oil (consuming about 20% of global oil) but also the leading oil producer. The supply and demand balance in the USA gives a rough idea of the oil market on the whole. Traders, investors, and other market participants follow attentively oil statistics from the USA. Publication of these data is quite often followed by serious market volatility.

One of the most popular EIA reports is the weekly report on the state of the oil market called This Week In Petroleum. This report is published every Wednesday and contains comments on changes in oil reserves, demand, and other parameters of crude oil and oil products. If there are some unexpected major changes about crude oil and petroleum in the report, the market might react dramatically.

Which info is there in the report?

Investors and oil traders study the EIA report very carefully to use the data for forecasting the behaviour of prices for energy carriers. Analysts from energy companies also use the report to collect data that help them develop long-term business strategies.

The information published in the EIA report:

• Domestic Production: production level of the previous week in the US. This is prelim estimation that can be mended later.
• Percent Operable Utilization: if refineries work at their most, this might indicate increased demand for oil products.
• Crude Oil Inventories: this is the most important part of the report that represents the changes in oil reserves in the US.
• Total Motor Gasoline Stocks: obviously, this represents changes in gasoline stocks. This parameter is seasonal: in summer, demand for gasoline grows, which might be reflected in a decrease in the stocks.
• Distillate Fuel Oil Stocks: represents changes in the stocks of crude oil products.
• Crude Oil Import: represents – obviously – changes in the import of oil in the US. An increase in the import can sometimes lead to the growth of oil inventories.
• Crude Oil Export: represents the dynamics of oil export from the US. This parameter has been growing since a couple of years ago.

The key parameter is Crude Oil Inventories. If the report represents a higher parameter than had been expected, this means the demand is weak, and oil quotations become stressed out. A decrease in oil inventories means that the demand has got higher than the supply and helps oil prices grow. Crude Oil Inventories in the US are published weekly on the Economic Calendar.

How to use the report in trading

Oil quotations are influenced by a whole bunch of data, including the EIA report. And as long as the report influences the quotations, investors and traders use it in their work. Investors prefer long-term strategies and traders – short-term ones.

Long-term trading

For planning long-term trading which means holding an open position for weeks or months, traders analyse the reports over a certain period.

For example, they can check for a downtrend or uptrend in oil inventories over several weeks or serious deviations from the average over several years.

Though weekly EIA reports provide data important for understanding oil supply and demand balance in the US, investors also have to be attentive to the international situation.

Short-term trading

Trading strategies used for short-term trading on changes in oil reserves in the US have little differences to the general principles of trading news. When the data is published, short-term momentum movements of the quotations emerge, and they can be used for trading.

The direction of trading is chosen based on the current market situation, the technical picture, and data published in the report. Use tech analysis to detect the trend and draw the nearest support and resistance levels.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, a RoboForex project called ContestFX offers you the following exciting competitions:

The 148th competition of "Demo FOrex" has crossed its "Equator".
The 423rd competition of "Week with CFD" has just started.
The 557th competition of "Trade Day" will start on 26.07.2023 at 12:00.
The 471st competition of "KingSize MT5" will start on 27.07.2023 at 20:00.

To take part in our demo contests, all you need to do is to go through a short registration procedure just once, and then any of the competitions you like will be available to you in just a couple of mouse clicks.

Join us, it won't be boring!

Sincerely,
RoboForex Contest

 

[Vlad RF]

What is Market Sentiment in Forex, and How It is Used in Trading

Author : Victor Gryazin

Dear Clients and Partners,​

In this overview, I will get you acquainted with such a notion as market sentiment in Forex. It helps confirm the current trend and warns you of its probable end.

What is market sentiment?

The market sentiment means the prevailing mood of most market participants at a certain moment. The word “sentiment” is of French origin and means “feeling, mood”. Market sentiment shows what market participants are currently keen on – buying a financial instrument (a group of assets) or selling it.

In other words, market sentiment is the current balance of traders’, investors’, and other market players’ optimism and pessimism about a certain financial market or asset. This is some sort of collective emotion based on certain expectations. The expectations are formed, as a rule, by the news and various fundamental factors.

For example, if market participants are sure that the stock market will be growing, they start buying shares actively and thus support the bullish trend. On the contrary, if most players are sure that the stock price will be falling, and a bearish trend will appear – they will start selling assets that they expect to decline soon. As a result, market supply will become excessive, making the price drop.

Forex market sentiment shows what most market participants prefer to do now: buy or sell currencies. Traders use such expressions as “buy bucks” - this means traders are ready to buy the USD against other currencies, or “sell bucks” - which means traders are ready to sell the USD against other currencies.

Market sentiment and expectations are influenced by several factors. Factors that support the currency rate form positive sentiment (moods to buy). Factors that drive the currency down form negative market sentiment (moods to sell). Check below the factors that influence Forex market sentiment.

What factors influence Forex market sentiment?

Market sentiment is mostly influenced by so-called fundamental factors. They include various financial, economic, and political events that influence directly currency rates. Such factors are studied by fundamental analysis. Here are the most important of such factors:

• Monetary policy of Central banks: cycles of increasing and decreasing the main interest rate can form long-term uptrends and downtrends in the national currency. If market players expect the rate to grow, the market sentiment will be bullish: market players will be ready to buy. If a decrease in the interest rate is expected, things go vice versa.
• Economic factors: if the news about the country’s economy is positive (GDP, employment, production, etc.), market sentiment about the currency improves.
• Political factors: elections, government resignations, scandals, sanctions, etc. can form negative market sentiment towards a currency.
• Rumors and expectations: they include political and economic factors but in the form of rumors and expectations.
• Force majeure: natural disasters, man-made disasters, terror acts, epidemics. All this can form serious negative sentiment towards a currency.

The influence of fundamental factors on Forex market sentiment can be short-term (several minutes to several days) or long-term (several weeks, months, years). For example, information about the growth of unemployment last month can have a short-term negative effect on market sentiment, while an announcement of the CB head about the necessity to increase interest rates can form a long-term positive sentiment to a currency.

Indicators for assessing Forex market sentiment

To detect the current market sentiment, various indicators can be used. They try to evaluate market sentiment and express it in digits or graphically. By them, one can conclude on the current positions and opinions of traders and how they can influence price moves.
Here are three popular indicators for assessing Forex sentiment.

DXY

The DXY (US dollar index) is the main index that shows the current market sentiment towards the leading world’s currency. The direction in which the index goes (the current trend) reflects the actual market balance. The growth of the index means positive market sentiment and the growth of the USD against major currencies, while the decline of the index means negative sentiment and weakening of the major currency.

The DXY is traded in exchanges as futures and options. By tech analysis, you can analyze the chart of the index and detect the current sentiment towards the USD: positive, negative, or neutral. You can find the DXY chart on various informational resources such as tradingview.com.

COT reports on currency futures

A COT (Commitments of Traders) report is a weekly publication showing aggregate positions of various players of futures markets. The COT is published every Friday by the US CFTC. Though this data refers to futures, they correlate strongly with the Forex market.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

RoboForex adds additional MT4 trading servers for its clients

Dear Clients and Partners,​

RoboForex launched three new dedicated servers (RoboForex-Pro-5, RoboForex-ECN-3, and RoboForex-ProCent-8) for the MetaTrader 4 platform. This improvement will help to enhance the stability and performance of our trading servers.

The new servers are available for clients with Pro, ECN, and Cent Affiliate account types.

Pro

The most popular account type at RoboForex with optimal trading conditions for traders with different experience levels.

• Floating spread - from 1.3 pips
  
• Leverage - up to 1:2000
  
• Trading instruments - more than 100
  
• No commission for the trading volume

ECN

An account type for experienced traders which combines the tightest spreads, high execution speed, and competitive trading conditions.

• Tight spreads - from 0 pips
  
• Leverage - up to 1:500
  
• Trading instruments - more than 100
  
• Commission for the trading volume - from 5 USD
  

Cent Affiliate is a special type of account which is suitable for partners who provide their clients with certain services. More information is available here.

Open an account
and start trading with competitive conditions

Full details of accounts >​

Sincerely,
The RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the ContestFX project will continue with the following demo competitions:

The 148th competition of "Demo Forex" is coming to its end.
The 424th competition of "Week with CFD" has just kicked off.
The 558th competition of "Trade Day" will start on 02.08.2023 at 12:00.
The 472nd competition of "KingSize MT5" will start on 03.08.2023 at 20:00.

All winners of our contests receive prize funds to their real trading accounts, and they can use those funds for trading in the Forex market instead of investing their own savings.

Don't miss your chance to be one of the winners!

Sincerely,
RoboForex Contest

 

[Vlad RF]

How to Make Money on Stocks Decline?

Author : Andrey Goilov

Dear Clients and Partners,​

It is widely thought that any trader can make money on the growing market but if the market is falling, only a few can make use of it. Indeed, falling of the stock price of large companies is interpreted as a good opportunity to buy the stocks and earn money later, on their increase.

At the beginning of 2019, one Apple stock cost about $142 but by the end of the year, it has reached $169. As we can see, even buys on a falling market can yield a good profit in a year or less.

However, if the trader wants to take everything from the market and make money on the falling of stock prices as well, it is worth figuring out how and at what risk we can do so: if we buy, we do not care how much the price grows, be it 100% or 200%; but if we sell, our potential loss may be substantial if the company grows well.

How to sell stocks?

Of course, a question emerges: how do we sell what we do not own? Here, the broker company comes to the scene, helping the trader make such operations. By the way, we have a nice article with guidelines for choosing a broker.

The idea is that you loan a certain number of stocks from the broker. Then you sell them at the current market price; thus your debt to the broker appears. This is the first part of the operation: opening the position.

To complete the operation, we need to give back the loaned stocks to the broker, buying them at the market price. To make money, you need this price to be lower than the initial one. This is the second part of the transaction — closing the position.

In October 2018, the Apple stocks were testing $230 per stock and then fell to $142. Let us see how we can calculate the profit on this falling.

Imagine we have forecast this decline and realize that we can earn $85 on one stock. We decide to open a position selling 25 Apple stocks at $230, the aggregate sum being $5,750. To close the position, we need to give back to the broker 25 stocks but at the price of $145. In other words, instead of $5,750, we give back $3,625. Our profit may be $2,125. We should remember that this is a historical example that represents the idea, real trading requires a risk assessment.

Why does the broker give this opportunity?

For such a specific service as loaning stocks to a physical person, the broker charges a certain fee. The price is normally represented in the trading conditions: normally, it is a commission fee for opening and closing the position. Thus, the broker will make money on loaning the stocks, while the trader will have an opportunity to make money on the expected decline.

Will I have dividends for such a transaction?

Experienced traders do not recommend to sell stocks before the payment of dividends. The thing is that loaned stocks will not bring dividends: they will be received by the real owner holding a long position on them. The trader who sells the stocks pays dividends to the owner.

It turns out that we cannot count on additional income in the form of dividends during such an operation, we make money only in the case of a serious falling.

Is there any risk?

Of course, speculative trading always involves risks. It is thought that the risk of a loss on a short position is always much higher than when buying stocks.

If we have bought a stock at $5 per stock, when the price falls to 0, we only lose $5. If we sell a stock at $5, the price may grow not only to $10 but to $50, to $100 or higher. In this case, we may lose much more than just $5.

Here, the risk is, indeed, high at the moment of opening a selling position. However, as with Apple, fallings happen, and we can make money on them, and risk management is an important part of trading.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[Vlad RF]

Drawdown: What is It and How to Escape It?

Author : Dmitriy Gurkovskiy

Dear Clients and Partners,​

Such sonorous terms as Margin Call and Stop Out must be known to anyone who deals with trading. Each person has come to know it in their way: some got acquainted with them practically, forcefully closing their losing positions, some - theoretically, studying the basics of trading.

If you have not heard these terms yet, a short lecture will, perhaps, make you think well about the consequences of unreasonable and excessively emotional trading.

Margin Call is a notification from your broker, in which they require to additionally replenish your security deposit.

If after a Margin call the trader does not deposit heir account, and the losses keep growing, then after the price reaches a certain level, the Stop Out procedure will be launched. This means the broker will close some or all open positions on the account. However, Margin Call and Stop Out are not as disastrous as the trader's actions that lead to them.

One such action might be connected to unthoughtful trading operations based on no strategy or tactics, without risk and money management. An example of such actions can be trading the whole capital both in periods of high volatility and a calm market. In such times, the trader is more of a gambler, hoping for a quick gain.

What is a drawdown?

A drawdown is a decrease in the balance and equity on the trading account; to put it simpler, a drawdown is a loss. Drawdowns can be of two types: floating and fixed.

Floating and fixed drawdown

Floating drawdown is an aggregate loss of all open positions. Here, we highlight that the trades we are talking about are still open.

For example, the trader opened a position, and then the market situation started developing counter the forecasts, so the trade yielded a loss. This loss will constitute the floating drawdown.

Also, such a drawdown is called floating or temporary because a day or two later the situation might change either for better or for worse.

Reasons for drawdowns

I will keep repeating that bad trading can be explained by the wrong choice of a strategy and a lack of risk management and money management. However, even if the trader has all these elements of trading, they might be betrayed by their psychology and/or personal discipline.

The mistakes will be revealed by increases in the trading volume, unreasonable and chaotic buying and selling, locking and using the Martingale. Of course, all this might work, but it will not be systematic.

If you have drawdowns too often, you should think something like: "Am I trading the right way?". I mean, you can plan your profit and losses if your trading system is in harmony with the market and your money management helps you escape drawdowns quickly and accumulate profit.

If your trading account does get in a drawdown, first and foremost, you have to accept it. Any trader has got a drawdown sometime, and its presence on the account is virtually normal, the question is in its size.

How to escape a drawdown?

So, we are now nearing the part which is the reason for you to have started reading this. Again, a drawdown of an account is a natural situation you will hardly avoid. However, it can always be optimized, and its influence on the account - minimized. All this is rather easy to do: you need to follow the rules of money and risk management and your strategy. For most people, my words will seem banal. This is because not all readers have a strict financial plan, a trading strategy, risk and money management systems. So, the first step out of the drawdown will be adding the aforementioned to your trading.

There is a law: the deeper the drawdown, the longer it will take you to get out of it. If the trader was unlucky to lose 50% of the deposit in 2-3 trades, it is unlikely they will restore the capital in an equally short time.

On the Internet, you can find lots of information counter averaging, locking, and using the Martingale; however, advocates of these methods are also there. Not wishing to start an argument, I will say that both averaging and locking may do the trader lots of good if they know the tricks.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team

 

[RoboForex Contest]

Dear traders!

This week, the project of the RoboForex company called ContestFX is waiting for you to participate in the following contests:

The 149th competition of "Demo Forex" and the 425th competition of "Week with CFD" have just started.
The 559th competition of "Trade Day" will start on 09.08.2023 at 12:00.
The 473rd competition of "KingSize MT5" will start on 10.08.2023 at 20:00.

We remind you that to participate in our demo contests, all you need is to go through a simple registration procedure, and then any of the competitions you like will be available to you in just a couple of mouse clicks.

We're looking forward to your joining in and wish you good luck!

Sincerely,
RoboForex Contest

 

[Vlad RF]

What Is PPI and How to Use It?

Author : Igor Sayadov

Dear Clients and Partners,​

One of the previous articles was devoted to the CPI – Consumer Price Index. Today’s article is about its nearest relative – the PPI (Producer Price Index).

What are they different in? What do they show? How to use the PPI in the currency market? This article tries to answer these questions.

Some history

The necessity to track indices appeared as early as the 20th century. In 1925, at the International Conference of Labor Statisticians, certain rules of data collection, processing, generalizing, and presenting were adopted. The importance of such information was acknowledged by all the participants of the conference.

Also, at the Conference, a universal approach to planning and regulating price policies of countries was worked out. Practically, these were the first steps towards globalizing international markets.

The standards created that time were revised three times later: in 1947, 1962, and 1987. In 1962, at the tenth Conference, the term PPI was finally adopted. This is exactly the term used today.

PPI vs CPI

The CPI (Consumer Price Index) is an instrument representing changes for goods and services prices at the final consumer’s side over a certain period. These data is normally used by Central Banks to make interest rate decisions.

When inflation grows, interest rates on loans start being increased in cycles, and when inflation slows down – they start being decreased the same way.

The PPI (Producer Price Index), in turn, reflects changes in goods prices at the wholesale stage, i.e. at the manufacturer’s end. The producer price practically demonstrates the whole range of spending, from buying crude materials through its processing, expenses on energy carriers, expenses on logistics, and to the final product.

As a result, producer prices start changing a bit earlier than at the consumer’s end. This allows calling this index a leading one, signaling about the future inflation level

Where to find the PPI?

PPI values are calculated and published monthly. Every country has a national institution that cares for it.

For example, in the USA, the index is calculated by the Bureau of Labor Statistics, and in Britain – by the Office for National Statistics.

You can find the current, previous, and forecast PPI values in the RoboForex Economic calendar.

How to use the PPI in trading

Take a look at some examples of using the index for trading in the currency market.

Example 1

On September 10th, 2021, the USA published the new PPI value. It turned out to be 8.3% instead of 8.2% expected.

In the USA, the PPI touches upon three sectors: industry, goods and commodities, and recycling.

If the index values exceed expectations, the market goes up (the USD is bullish); if otherwise, the USD becomes bearish.

As a rule, waiting for such news, the market consolidates in narrow ranges. Try using M15 and M30.

Choose the instrument in which it is easier to see the borders of the range, and place pending orders for breakaways of these borders.

For example, let us look at the reaction of the euro to this news. Check the chart below:

A pending selling order for a breakaway of 1.1818 downwards would have brought you a profit at 1.1777. This is the goal of the first wave of decline by the trend.

A pending buying order was to be placed at a breakaway of 1.1855 upwards. But as soon as a selling order is triggered, cancel the buying one.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team