The dollar is not as stable as gold, but it is much more liquid than gold. Therefore, the dollar is considered the first type of money, gold is the second type. When there is international political tension and uncertainty, people buy gold in anticipation of a rise in its price. But the currency that most people keep in their possession is actually the dollar. If a country needs to buy weapons or other supplies from another country during a time of war, it will also sell its gold short in exchange for dollars. Therefore, the dollar may not rise in times of political instability, but also depends on the trend of the dollar. Simply put, the dollar is strong gold is weak; gold is strong dollar is weak. Usually investor only savings capital preservation, take gold will give up the dollar, take the dollar will give up gold. Although gold itself is not legal tender, but always have its value, will not depreciate into scrap metal. If the U.S. dollar trend is strong, investment in the U.S. dollar appreciation opportunities, people will naturally chase the U.S. dollar. On the contrary, when the dollar in the foreign exchange market, the weaker, the price of gold will be stronger.
(2) War and political unrest
War and political unrest, the development of the economy will receive great restrictions. Any local currency may be devalued due to inflation. This is where the importance of gold comes into play. Due to the recognized nature of gold as an internationally accepted medium of exchange, people target gold at such times. The rush for gold will also inevitably cause the price of gold to rise. But there are other factors **** the same constraints. For example, in the 89 to 92 years, the world appeared a lot of political unrest and sporadic war, but the price of gold did not rise. The reason is that at that time everyone held dollars, abandon gold. Therefore, investors can not mechanically apply the war factors to predict the price of gold, but also consider other factors such as the dollar.
(3) World Financial Crisis
If there is a world-class bank failure, what will be the reaction of the gold price?
In fact, this scenario occurs because of the crisis. People naturally keep money in their possession and there would be a massive run on the banks or bankruptcy and closure. The situation is like the recent economic crisis in Argentina, where the people of the country had to exchange their dollars from the banks and the country banned the exchange of dollars in order to keep the last investment opportunities, thus there were constant riots and the country was thrown into a panic. When the United States and other Western powers of the financial system appeared unstable phenomenon, the world funds will be invested in gold, gold demand increases, the price of gold that will rise. Gold at this time will play the function of capital refuge. Only in the case of financial system stability, the confidence of the investing public on gold will be greatly reduced, will sell gold caused by gold prices fell.
(4) Inflation
We know that the purchasing power of a country's currency is based on the price index. When a country's prices are stable, the more stable is the purchasing power of its currency. Conversely, the higher the inflation rate, the weaker the purchasing power of the currency, and the less attractive that currency becomes. If the price index of the United States and major regions of the world remain stable, holding cash will not depreciate in value, and interest income, will inevitably become the preferred choice of investors.
On the contrary, if inflation is sharp, holding cash is not guaranteed at all, and interest can not catch up with the surge in prices. People will then purchase gold, because at this point the theoretical price of gold will rise with inflation. The higher the inflation of the major western countries, the higher the requirement of gold for value preservation, the world gold price will be higher. Among them, the United States of America's inflation rate is most likely to sway the movement of gold. And some smaller countries, such as intelligence, Uruguay, etc., the annual inflation can reach up to 400 times, but the price of gold has no effect.
(5) the price of oil
Gold itself is the inflation under the preservation of the value of goods, and the U.S. inflation is inseparable. Higher oil prices mean that inflation will follow and so will the price of gold.
(6) Local Interest Rates
Investing in gold doesn't earn interest, and the profitability of the investment is based on price increases. When interest rates are low, under the measure, investment in gold will have some benefit; but when interest rates rise, charging interest will be more attractive, the value of investment in gold without interest will decline, since the opportunity cost of gold investment is larger, it is not as good as put in the bank to collect interest is more stable and reliable. Especially when the United States interest rates rise, the dollar will be a large number of absorption, the price of gold is bound to suffer.
Interest rates and gold have a close link, if the country's interest rate is higher, it is necessary to consider the loss of interest income to buy gold is worth it.
(7) the economic situation
The economy is thriving, people live without worry, will naturally enhance people's desire to invest in the private sector to buy gold for the preservation of value or decorative ability will increase greatly, the price of gold will also get some support. On the contrary, the people are not happy, the economic depression period, people even eat and wear clothes of the basic security can not be satisfied, and where there will be the interest of gold investment? Gold prices are bound to fall. The economic situation is also constitute a factor in the fluctuation of the price of gold.
(8)Gold supply and demand
Gold price is based on the basis of supply and demand. If the production of gold increases significantly, the price of gold will be affected and fall back. However, if there is a prolonged strike by miners and other reasons to stop the increase in production, the gold price will appreciate in the case of demand exceeding supply. In addition, the application of new gold mining techniques and the discovery of new mines will increase the supply of gold, which will of course lead to a fall in the price. A place may also appear to invest in gold, such as the gold investment boom in Japan, the need to greatly increased, but also led to the price of climbing.
There are many aspects to the basic analysis of gold movements, and when we utilize these factors, we should take into account the strength of their respective roles. Finding the primary and secondary positions and time periods of influence of each factor to make the best investment decision.
Fundamental analysis of gold is divided into short-term (usually three months) and long-term factors. We have to treat their influencing role separately.
The financial calendar:
1. Japan's short-term report
The Japanese government conducts a quarterly survey of nearly 10,000 companies on future industry trends, which investigates companies' confidence in the short-term economic outlook, as well as their perceptions of the current and future economic conditions and the outlook for company earnings. Negative results indicate that more companies are pessimistic than optimistic about the economy, while positive results indicate that more companies are optimistic than pessimistic.
Historically, the data from the quarterly corporate short-look reports released by the Japanese government have been highly representative of the country's future economic trends, and therefore have been fairly well correlated with stock market and yen exchange rate fluctuations.
2. Notes on the Federal Reserve System
The Federal Reserve (The Fed) was established by an act of Congress in 1913. Prior to the creation of the Fed, the money and credit activities required by the U.S. economy were carried out by a decentralized banking system.
Monthly, the Federal Reserve's Monetary Policy Committee will hold a monetary policy meeting to analyze the news and other relevant economic information collected by the Federal Reserve Banks and make an assessment of the current and future economic situation, and with it, decide on the approach to be used to match the growth of the economy or to slow down the downturn of the economy, including the decision on the level of interest rates.
Because of the dominant position of the U.S. economy in the world, the Federal Reserve's views and policies on the domestic and international economy are very important and often have a greater impact on the foreign exchange market.
3. Consumer Credit Balance
Consumer Credit Balance (Consumer Credit), which includes household loans for the purchase of goods and services that will be repaid in two months and more.
In the western countries, the loan consumption is a very common phenomenon, in the purchase of large commodities, such as housing, automobile, or the purchase of large services, such as receiving a university education, etc., the number of people applying for a loan from the bank will be quite large, which will form the consumer credit balance.
Generally speaking, the foreign exchange market does not react strongly to consumer credit balances if they do not fluctuate significantly. At the same time, we can not read the consumer credit balance in isolation, but in combination with other data to examine
4. Auto Sales
Auto Sales (Auto Sales) is an important part of consumer spending, and can be a good reflection of the consumer's confidence in the economic outlook.
Automobile sales are usually the first source of information about the strength of a country's economic cycle, and precede the release of other personal consumption data. As a result, auto sales provide a good predictor of subsequently released retail sales and personal consumption expenditures, with auto sales accounting for 25 percent of retail sales and 8 percent of overall consumption. In addition, automobile sales can serve as an early signal to foretell recessions and recoveries.
Automobile sales that rise generally signal a turnaround in the country's economy and an increase in consumers' willingness to spend, which is good for the country's currency and may be accompanied by a rise in the country's interest rates, spurring an uptick in the country's currency exchange rate.
5. IFO Business Climate Index
IFO Business Climate Index (IFO Business Climate Index) is compiled by the German IFO research organization, for the observation of the German economic situation of the important leading indicators. IFO is the German Institute for Economic Information registered association of the acronym in English, founded in 1949 in Munich, is a public interest, independent economic research institute. IFO is a public, independent economic research institute, known as one of the German government think tanks.
The IFO Economic Sentiment Index is compiled by conducting monthly surveys of various industrial sectors, including manufacturing, construction, and retailing, each covering more than 7,000 entrepreneurs, and compiling an index based on the enterprises' assessment of their current situation, as well as short-term business plans and views for the next six months.
Because the IFO Economic Prosperity Index is published monthly and surveys companies' views on the future, and because it covers a wide range of sectors, it has a high degree of reference in forecasting economic trends.
6. ISM Index
ISM Index is an important data released by the Institute for Supply Management, which has an important impact on the prosperity of the U.S. economy and the strength of the U.S. dollar.
The Institute for Supply Management (the Institute for Supply Management, ISM) is the world's largest and most authoritative professional organizations in the fields of purchasing management, supply management, logistics management. Established in 1915, the organization, formerly known as the American Purchasing Management Association, currently has more than 45,000 members and 179 chapters, and is one of the nation's most respected professional groups.
ISM index is divided into manufacturing index and non-manufacturing index two.
ISM Institute for Supply Management Manufacturing Index consists of a series of sub-indexes, of which the Purchasing Managers' Index is the most representative. The index is a barometer reflecting the comprehensive development of the manufacturing sector in terms of production, orders, prices, employees, deliveries and other aspects, usually with 50 as the threshold, higher than 50 is considered to be the manufacturing sector is in a state of expansion, lower than 50 means that the manufacturing sector is shrinking, affecting the pace of economic growth.
ISM Institute for Supply Management non-manufacturing index reflects the degree of prosperity of the U.S. non-manufacturing business activity, when its value is located above the level of 50 consecutively, suggesting that non-manufacturing activity expansion, price increases, often indicating that the economy as a whole is in a state of expansion; Conversely, when its value is located in the 50 consecutively below the level of the economy as a whole is often predicted in a state of contraction.
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7. Purchasing Managers' Index (PMI)
Purchasing Managers' Index (Purchase Management Index) is a measure of the state of manufacturing in eight ranges: production, new orders, commodity prices, inventories, employees, delivery of orders, new export orders and imports.
The Purchasing Managers' Index is expressed as a percentage, and often uses 50% as a cut-off point for economic strength: i.e., when the index is above 50%, it is interpreted as a signal of economic expansion. When the index is below 50%, especially when it is very close to 40%, there are concerns of a recession. It is a very important subsidiary indicator in the leading indicators, the market is more important to the U.S. purchasing managers index, it is the U.S. manufacturing medical checklist, in the United States purchasing managers index before the release of the national purchasing managers index, will also be published in the Chicago purchasing managers index, which is part of the national purchasing managers index, the market tends to Chicago purchasing managers on the performance of the purchasing managers index to the national purchasing managers index to make the expectation.
In addition to the focus on the overall index, the Purchasing Managers' Index of Prices Paid and Prices Received are also considered to be a type of price indicator, while the Employment Index is more often used to predict the performance of the unemployment rate and non-agricultural employment.
8. Average Hourly Earnings
Average Hourly Earnings (AHE) is a measure of the wages and salaries of private non-agricultural workers using average hourly and weekly earnings.
The hourly earnings data reflect changes in the hourly base wage rate and reflect increases in bonuses for overtime, and Average Hourly Earnings may be an earlier indicator of industry wage and salary cost trends complementing the Employment Cost Index,*** which also informs the measurement of total labor costs.
The indicator has some volatility and limitations, but is still the headline news about inflation in a month, the foreign exchange market is mainly concerned with the change in average hourly and weekly wages adjusted with the seasons on a monthly and yearly basis. In general, if average hourly salaries are expected to cause an increase in interest rates, then a rapid rise in hourly wages will create a favorable stimulus for that country's currency, and vice versa. In the United States, this indicator is monitored by the Federal Reserve Board.
9, capacity utilization
Capacity Utilization (Capacity Utilization), also known as equipment utilization, is the ratio of total industrial output to production equipment, a simple understanding of the actual production capacity in the end, how much of the actual production capacity in the operation of the production role.
The statistics cover a range of eight items, including manufacturing, mining, utilities, durable goods, non-durable goods, base metal industry, automotive, and gasoline. It represents the degree of capacity utilization in the above industries.
When the capacity utilization rate exceeds 95% or more, it means that the equipment utilization rate is close to full, and inflationary pressure will rise sharply with the capacity unable to cope with it, which is positive for a country's currency when the market expects interest rates may rise. Conversely, if the capacity utilization rate is below 90% and continues to decline, it means that too much equipment is idle and the economy is in recession, which is bearish for the country's currency when the market expects interest rates to decrease. The market generally pays the most attention to U.S. capacity utilization data.
In the U.S., the previous month's data is generally released in the middle of each month.
10. Durable Goods Orders
Durable Goods Orders (Durable Good Orders) represents the number of items ordered in the next month that are not easily worn out, the data reflects manufacturing activity, and by definition, orders refer to the transaction of goods intended to be purchased and expected to be shipped immediately or in the future.
This statistic includes orders for heavy industrial products such as automobiles, airplanes, and capital goods for manufacturing, as well as other items such as appliances.
Because the statistic includes defense sector supplies and transportation sector supplies, which are high-priced products, changes in these two sectors have a big impact on the overall data, so the market also pays more attention to the changes in the data after deducting defense sector supplies and transportation sector supplies. Overall, if the data grows, it indicates an improvement in the manufacturing sector, which is good for the country's currency. On the other hand, if it decreases, it indicates a contraction in the manufacturing sector, which is negative for the country's currency. The market generally pays the most attention to the U.S. durable goods orders index.
In the U.S., the previous month's data is generally released in the second half of each month.
11. Producer Price Index
Producer Price Index (Producer Price Index), abbreviated as PPI, is mainly used to measure the price changes of various commodities at different stages of production, as well as the Consumer Price Index (CPI), which is usually used as an important indicator to observe the level of inflation.
For the foreign exchange market, the market is more concerned about the monthly changes in the final product PPI. As food prices increase due to seasonal variations, and energy prices are often subject to unexpected fluctuations, in order to more clearly reflect the price changes of overall commodities, changes in food and energy prices are generally excluded to form the "core PPI", which is used to further observe the trend of inflation rate changes.
In the U.S., the U.S. Producer Price Index (PPI) data collection by the U.S. Bureau of Labor Statistics is responsible for the questionnaire to the major manufacturers to collect information, the collection of the base month is every month, including the 13th of the week, including the week's 2,300 kinds of commodities offer, and then weighted converted to the form of a hundredth of a form, in order to facilitate the comparison of the base period was set in 1967.
Generally speaking, when the increase in the producer price index is large and continues to accelerate, the country's central bank's corresponding response is to take the countermeasure of interest rate hikes to stop the rapid rise in inflation, then the likelihood of the country's currency appreciation increases; and vice versa.
12. Current Account
Trade Current Account (Current Account) for a country's income and expenditure statement on the main items, the content of the record of a country and foreign countries, including because of the goods, services, imports and exports, investment income, other goods and services, as well as other factors arising from the situation of outflow and inflow of funds.
If the balance is positive (surplus), it indicates an increase in the country's net foreign wealth or net foreign investment. If it is negative (a deficit), it indicates a decrease in the country's net foreign wealth or investment.
Generally speaking, when a country's current account deficit widens, the value of the country's currency will depreciate, and when the surplus widens, the value of the country's currency will appreciate.
In the West, usually monthly or quarterly current account data will be published, but a month of trade data on the market reference role is not large, each quarter after the adjustment of the current account is more important.
In the 7, 80's, the current account deficit used to have a greater impact on the foreign exchange market, this influence has faded, but for the U.S., the current account deficit still has a greater impact on the dollar.
13. Fiscal deficit
Fiscal, that is, a government's income and expenditure. A government at the beginning of each fiscal year, always develop a fiscal budget program for the year, if the actual implementation of the results of revenue is greater than the expenditure for the fiscal surplus, expenditure is greater than the revenue for the fiscal deficit.
There are many reasons why a country runs a fiscal deficit. Some are due to lower tax rates or increased government spending in order to stimulate economic development, while others are due to government mismanagement, causing massive tax evasion or excessive waste. When a country's fiscal deficit accumulates too high, like a company carrying too much debt, the country's long-term economic development is not a good thing, for the country's currency is also a long-term negative, and in the future in order to solve the fiscal deficit can only rely on reducing government spending or increasing taxes, these two measures, for the economy or social stability have a negative impact. If a country's fiscal deficit increases, the country's currency will fall, on the contrary, if the fiscal deficit shrinks, that the country's economy is good, the country's currency will rise.
In the U.S., the Department of the Treasury generally announces the federal government's budget performance for the previous month on the 17th government working day of each month. The U.S. government has always been known for its fiscal deficits, the former President Clinton era deficit turned into a surplus, but Bush Jr. came to power, coinciding with the recession, and foreign continuous use of the military, resulting in high deficits again.
14. New housing starts and building permits
Construction indicators in the data system generally occupy a more important position, because the real estate industry for modern economies have a pivotal position, and a country's economic prosperity or not will often be reflected in the construction indicators.
In the U.S., new housing starts are usually reported between the 16th and 19th of each month.
Generally speaking, an increase in new housing starts and building permits is theoretically good for the country's currency and will push it stronger, while a decline or weaker-than-expected new housing starts and building permits will put pressure on the currency.
15. Consumer Price Index
Consumer Price Index (Consumer Price Index), abbreviated as CPI, is to reflect the prices of products and services related to the lives of residents out of the statistics of the price change indicators, usually as an important pointer to observe the level of inflation.
Many economists exclude some of these indicators for analytical purposes, mainly food and energy prices, which are volatile. This is known as the core consumer price index.
The Consumer Price Index is one of the most commonly cited price indexes when discussing inflation. When the CPI rises too much, there is inflationary pressure, at which point the central bank may control it by raising interest rates, which is positive for a country's currency. The CPI also does not fully reflect the reality of price changes, as most products related to life are final products whose prices only go up and not down, and it is necessary to combine this with other data to look at inflation in a holistic way.
But if the CPI rises too much, the central bank risks tightening monetary and fiscal policy if inflation becomes a destabilizing factor in the economy, creating uncertainty in the economic outlook, so too much of an increase in the index is not welcomed by the market.
In the U.S., the current Consumer Price Index is based on the average price level from 1982 to 1984, covering seven major categories such as housing expenditures, food, transportation, health care, apparel, entertainment, and other, and the prices of 364 items are used to determine the weights of the various expenditures, which are usually published in the third week of each month.
16. Retail Sales
Retail Sales (Retail Sale), in fact, is a statistical summary of the amount of retail sales, including the total value of goods sold in cash or on credit by all stores primarily engaged in the retail business. Expenses incurred in the service sector are not included in Retail Sales.
Retail data are an important guide to determining a country's economic status and outlook because retail sales directly reflect changes in consumer spending. In developed Western countries, consumer spending usually accounts for more than half of the national economy, and in countries such as the United States and the United Kingdom, it can account for as much as two-thirds.
An increase in retail sales in a country represents an increase in consumer spending and an improvement in economic conditions, and interest rates may be raised, which is favorable for the country's currency, and conversely, if retail sales decline, it represents a slowdown or a poor boom, and interest rates may be lowered, which is negative for the country's currency.
In the U.S., retail sales data for the previous month are usually released on the 11th-14th of each month.
17. Leading Indicator
The Leading Indicator, also known as the leading indicator or leading indicator, is one of the most important economic indicators for predicting future economic developments, and is a weighted average of various economic variables that guide the economic cycle.
The Leading Indicator is usually published monthly, and the timing of its publication varies from country to country. A decline in the leading index for three consecutive months signals an impending recession, while a rise for three consecutive months signals an impending boom or continued expansion. Usually the leading indicators have a lead time of 6 to 9 months. In the United States, it is generally believed that the leading indicators can predict an economic downturn 11 months before a recession, and an economic recovery 3 months before an economic expansion. After World War II, leading indicators have been used successfully to predict boom and bust inflection points in the economies of developed Western countries.
Generally speaking, the foreign exchange market reacts strongly to sharp fluctuations in the leading index, with surges in the leading index pushing the country's currency stronger, and declines in the leading index pushing the country's currency weaker.
Currently, the biggest influence on the foreign exchange market is the U.S. leading index, which is released by the U.S. Department of Commerce on the last business day of each month. Other countries such as Japan, Switzerland, Canada, Germany, etc. will also publish the leading index, Germany's ZEW economic sentiment index and the IFO economic sentiment index also contains a certain meaning of the leading index.
18. GDP
GDP, or Gross Domestic Product, often abbreviated as GDP, is the most popular economic statistic in macroeconomics, as it is considered one of the most important measures of national economic development.
GDP is the Gross Domestic Product at market prices, which is the final result of the productive activities of all resident units of a country (or region) over a certain period of time. In other words, the value created by the factories invested by Japanese companies in the U.S. will also be counted in the U.S. GDP. it involves real economic activity.
Economically speaking, there are three forms of GDP, namely, the value form, the income form and the product form. In value terms, it is the difference between the value of all goods and services produced by all resident units in a given period and the value of all goods and services invested in non-fixed assets in the same period, i.e., the sum of the value added of all resident units; in income terms, it is the sum of the income generated directly by all resident units in a given period; and in product terms, it is the end-use of goods and services minus imports of goods and services.
Of course, as an ordinary investor, we do not need to go too far to explore the economic significance of GDP, what we have to focus on is the impact of GDP on the foreign exchange market.
The faster the GDP growth rate, the faster the country's economic development, the slower the growth rate, the slower the country's economic development, if the GDP into negative growth, the country is undoubtedly into recession.
Generally speaking, if the GDP maintains a faster growth rate, the country's currency will bring support, and vice versa for the country's currency to play a negative role. Here the growth rate is a relative concept, assuming that A, B two countries GDP growth rate of 1.5% and 0.5%, although the growth rate is not fast enough, but if this speed to maintain a period of time, the trend of the A currency will be better than the B currency. Here only consider the GDP factor, the actual foreign exchange trend should be integrated with other factors to see, but the GDP is one of the most important economic data, the foreign exchange market has a greater impact.
The publication of GDP in Western countries is usually divided into monthly and quarterly announcements, which is published quarterly GDP data is the most important, investors should examine the quarterly GDP with the previous quarter and the same period last year compared to the results of the data, the rate of growth, or higher than expected, can be considered as favorable.
19. Non-agricultural employment figures
Non-agricultural employment figures (Non-Farm Payroll) for the unemployment rate figures for one of the projects, which is mainly engaged in the statistics of agricultural production outside of the change in occupations, including teachers, service industry, consumer industry, etc.. The U.S. publishes this data the same time as the unemployment figures, on the first Friday of each month.
When the economy is booming, consumption naturally increases. This leads to an increase in jobs in the service sector, so these figures are an indicator of how robust the economy is. The financial calendar should pay attention to all the data about the U.S. If the U.S. CPI is high, it means that inflation is high, which is good for gold.