Gold is actually really simple to trade at the moment as it is being driven by the US yield story. The expectations of the Fed having to move on hiking rates more quickly are sending real yields higher. Remember that falling real yields is good for gold, and rising real yields is bad for gold prices. However, it is necessary to look at real yields in association with the USD.

What you want to see, in order to get a handle on gold’s direction, is not only real yields and the USD moving together but good reasons for that to continue. When both of these other markets align, that makes gold’s direction much more predictable.

Here would be the best scenario for further gold upside into year-end and 2022.

  1. The Fed pushes back strongly against early tapering. Unlikely to happen, but this would suppress yields AND weaken the USD.
  2. Inflation continues to rise sharply higher. This, in conjunction with point 1, would push real yields lower. So, if inflation moves higher faster than bond yields this can in effect push real yields lower.
  3. Expect year-end demand on strong seasonals for gold purchases around the Chinese Lunar New Year. Check out just how strong this seasonal pattern is here, courtesy of Seasonax.
  4. If the ECB suddenly turns aggressive (highly unlikely) on QE exit and moves towards rate hikes this weakens the USD as the EURUSD gains.

The charts

If you would like to track this yourself, and you use trading view, here is the symbol information.

  • The real yields symbol name on the trading view is QUANDL:USTREASURY/REALYIELD
  • The dollar index chart is the DXY

The problem you will discover is that real yields are only updated daily. So, if you want to get a sense for real yields intraday then you can use this TIPS bond ETF symbol: AMEX:TIP. It is updated during the UK afternoon after the US open and is a good proxy for real yields.

That is the key to getting a handle of gold. If the stars align then just use the key tech to manage and define that risk. Some of the very major levels are marked below:

FAQs about trading gold

How to Trade Gold Successfully?

In order to trade gold successfully, it is important to have a comprehensive understanding of both the fundamentals that drive the gold market and the technical aspects of trading. To start, it is vital to stay up-to-date on global economic indicators, geopolitical events, and central bank policies, as these elements can significantly impact gold prices. It is also crucial to learn technical analysis, which includes understanding chart patterns, trends, and using technical indicators to time entry and exit points. Another important aspect of successful gold trading is diversifying your trading strategy, which can be achieved through different time frames or by incorporating other assets, in order to help mitigate risks. Additionally, successful gold trading requires discipline and a well-thought-out trading plan that includes clear risk management strategies, such as setting stop-losses and defining risk-reward ratios that align with your trading goals.

How to Safely Trade Gold?

When it comes to trading gold, it’s essential to prioritize risk management and market education. The first step is to educate yourself about the gold market and the factors that can influence gold prices. Additionally, it’s crucial to use risk management tools such as stop-loss orders to safeguard your investment from significant losses. As a beginner, starting with a smaller investment is wise to minimize potential financial damage. Another way to reduce risk is to diversify your portfolio by including gold alongside other assets. Stay updated with global economic news and market trends, as they can directly impact gold prices. Finally, practicing with a demo account can be a valuable way to gain experience without risking real money.

What is the 5 Minute Gold Trading Strategy?

The 5 Minute Gold Trading Strategy is a method for trading gold that focuses on making small, quick trades within a very short time frame, using the 5-minute chart. This strategy usually involves using technical analysis tools such as moving averages, RSI (Relative Strength Index), and support and resistance levels to make prompt decisions. Traders search for specific patterns or signals on the 5-minute chart that indicate a good entry or exit point. This approach requires quick decision-making and often involves setting tight stop-loss orders to control risk. It’s important to note that while this strategy can be profitable, it also carries a higher level of risk due to the short time frame and the volatility of the gold market. Therefore, it’s recommended mainly for more experienced traders who can make quick and well-informed decisions and manage risk effectively.