Gold (especially the XAU/USD pair) is extremely popular among forex traders in South Africa. If you are thinking of starting trading this precious metal or looking for ways to enhance your results, learn how to choose the best time to trade XAU/USD in South Africa.
Is Gold Good for Day Trading in South Africa
The reason for gold’s tremendous popularity is its high liquidity and volatility that allow making a quick profit from intraday trades in particular. In addition, South Africa is a major gold-producing country. This fact may also contribute to the interest of the local population in this commodity.
Like the US dollar, gold is susceptible to macroeconomic events, which makes it popular among news traders. The price swings that take place during important news releases provide fertile ground for impressive profits. Read on to find out what time of the day is particularly favorable for XAU/USD trades.
Read more: Forex Trading for Beginners in 2022
The FX market is open round the clock from Monday to Friday, allowing you to trade XAU/USD anytime on weekdays. Despite this fact, some time of the day is particularly favorable for gold deals. This is when large market players trade it, ensuring the highest liquidity in the market. This time of the day coincides with the operating hours of the American trading session. A bit less activity is observed in the market during the European trading session and even less during the Asian market hours. See the schedule for the major trading sessions below.
| Trading session | Operating hours (GMT+2) |
|---|---|
| Asian trading session (Tokyo) | 2:00 am – 8:00 am |
| European trading session (London) | 9:00 am – 5:35 pm |
| North American trading session (New York) | 2:00 pm – 10:00 pm |
Thus, if you want to trade gold during the most advantageous time of the day, try to schedule your market operations for afternoons and evenings (South African time).
What Affects Gold Prices
So, what exactly makes the New York trading session so good for trading XAU/USD? The US currency is negatively correlated with gold which means that the commodity’s prices tend to rise whenever the US currency weakens. So, whatever happens to the dollar during the daytime in the US, it can’t help but affect gold prices. This way, the American trading session brings a lot of fundamentals to push the XAU/USD quotes either way. The events that affect the XAU/USD quotes may include FOMC meetings, Fed chairman’s speeches, nonfarm payrolls, etc.
The Best Way to Trade Gold in South Africa
The US currency is negatively correlated with gold which means that the commodity’s prices tend to rise whenever the US currency weakens.
There are a few recommendations you should follow to profit from XAU/USD price fluctuations:
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Follow up supply and demand for the precious metal.Gold prices depend on the supply/demand ratio. To grasp the idea of what is happening in the market, you can check the trends of mining companies’ stock prices.
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Take advantage of major macroeconomic news.The rule is simple here: anything that can affect the dollar price (FOMC meetings, Fed chairman’s speeches, nonfarm payrolls) will affect XAU/USD quotes in an opposite way (inverse correlation).
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Don’t neglect technical analysis.Charts will help you understand the current trend and the level of volatility in the market, as well as plan entry and exit points for your trades. This is extremely important information you should consider before placing a trade.
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Follow up investor sentiment.You can track the positions held by big market players by reading COT reports and get an idea of what the situation with non-commercial positioning of gold is.
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Trade when there is high liquidity in the market.The trading volume of gold is increasing during the North American session (2:00 pm – 10:00 pm). This is the time considered the most favorable for UAX/USD trading in South Africa.
Read more: Best Gold Trading Tips For Beginners
Final Words
Gold, like any other trading instrument, has its ups and downs throughout the day. Most active XAU/USD trading occurs during the North American session (2:00 pm – 10:00 pm). The high trading volume during those hours makes them the most advantageous for high-profit trades. Moreover, various important fundamentals are released during this period of the day. The events that are likely to trigger price changes include changes in monetary policy, nonfarm payrolls, etc. Traders should also closely follow the political and economic situation in gold producing countries as well as industrial and commercial demand for the commodity.
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