In the development of the modern economy, at first many countries' central banks guaranteed their exchange rates with gold. The point is this: as we all know that modern money is no longer made of gold but from paper. Thus the actual intrinsic value (true value) can be said to be very cheap or almost non-existent. Imagine a few decades ago, when developing countries were just independent and a central bank was established. Removing banknotes as an exchange rate can open up public doubts whether money is really as valuable as other goods which do have high intrinsic value.
Now as a way to guarantee it, the government at that time generally dared to claim that the paper money issued by them was guaranteed by the gold reserves owned by the state. This means that if people feel uncertain about the money issued by the central bank, they can just exchange it for gold. Of course the practicality is reduced compared to trade through paper money, but in this way the early world community believed each country's paper money as a legitimate exchange rate.
Walking with the times and the formation of modern civilization, the central bank has gradually ceased to guarantee the paper money that they spend with gold and makes gold precisely as one of the trading commodities like other items out there. This is because public trust has been far better for the government. As information, Bank Indonesia also once guaranteed the Rp. They spent in gold at the beginning of Indonesia's independence.
In an era where mining commodities are traded on the exchange as it is today, gold is also one of the main commodities traded along with other commodities such as petroleum, cotton, wheat, milk and many others. In Indonesia, there are no commodity exchanges like this yet, but the foreign community is very familiar with commodity futures trading.
Because this website is BelajarForex. Well, we don't want this gold article we associate with forex. Now, brother, now please refer to the following question: Have you ever thought that if the rise and fall of the price of gold would affect the forex market? For example, if the price of gold weakens, the USD (currency for US countries) will strengthen. Or if the price of gold rises, AUD (Australian currency) and NZD (New Zealand's currency) will strengthen ... Actually, how are the analysis so that gold price movements also affect the forex market ..... Well here I am will discuss some of the existing analyzes that connect gold and the forex market.
Lesson I: If the USD weakens then the price of gold tends to rise (strengthen), the opposite law also applies.
Note the word "tend" to you because it is not always so. Well, now we discuss the causes and reasons. There are 2 causes if the USD weakens then the price of gold tends to strengthen. First, because the fall of the USD will make the price of gold cheaper in other currencies so that it ends in an increase in demand for gold. This increase in demand triggered the strengthening of the value of gold. Second, if the value of the USD weakens, it will encourage investors to look for other investment instruments outside of USD (because they are weakening). Well, in this case gold is one of the most popular investment tools in the world. As a result the demand for gold also increased so the price also tended to soar.
Lesson II: If the price of gold rises, AUD and NZD tend to go up (strengthen), and vice versa.
Right! For those of you who already know you must have nodded. Australia and New Zealand are gold producing countries (gold producers). Well, automatically when the price of gold rises, AUD and NZD will tend to rise. Examples of its implementation in forex are if gold rises, the pair NZD / JPY (New Zealand currency against Japanese currency) and AUD / JPY (Australian currency against Japanese currency) tends to rise.
Belajarforex says:
Well, what we emphasize here is that more or less commodities like gold have an impact and relationship to the forex market. So, if you want to become a professional forex trader, you have to know a little more about the gold price trend.
Okay so first for this article about gold I thank you for visiting this site.
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