There are three key approaches to make a reliable gold rate prediction:
Fundamental analysis allows you to track changes in monetary policy and other factors affecting the price of precious metals. First of all, these are changes in the global financial system and the actions of the US central bank. Therefore, it is extremely important to take into account various macroeconomic indicators:
Federal funds rate changes;
Currencies’ movements and the money supply size;
Balance of imports and exports.
It is also important to take into account the state of the main gold-importing countries since more than half of the world’s demand for XAUUSD comes from India and China. It is well known that the global economy is closely related to geopolitics. This is another risk factor affecting the precious metals markets, including gold. For example, the aggravation of China-US relations can lead to sharp jumps in the gold price. Possible changes in the sanctions policy against Russia or China, trade wars, and political instability can greatly affect the XAU rate as well. Also, don’t forget about the main producing countries, as China, Australia, Russia, and Canada account for a third of the total $US/OZ supply.
Remember that fundamental analysis is commonly used in predicting global trends.
Technical analysis includes studying the history of XAUUSD quotes on charts using indicators and other tools for analyzing price movements. Technical analysis can help determine support and resistance levels, trend lines, possible price breakouts and reversals both in the long term, and in intraday trading.
Gold has a directional movement in the long term. Therefore, for technical analysis, trend indicators such as Moving Averages, RSI, MACD, and Bollinger Bands are primarily used.
Market sentiment analysis. This approach consists in assessing the mood of buyers and sellers, namely, who has a dominant position in the market at the moment. Market sentiment analysis instruments include surveys, content monitoring in social networks, and specialized online platforms, such as litefinance.org.
It is important to remember that market sentiment can change very quickly. It is influenced by future gold price forecasts from professional analysts or, for example, by what information Fed Chairman Jerome Powell will provide.