EUR/USD extended its daily decline toward 1.0500 in the second half of the American session, pressured by the souring market mood. Despite the bullish action seen earlier in the week, the pair remains on track to register weekly losses.
Following an earlier recovery attempt, GBP/USD turned south and declined below 1.2100 in the second half of the day on Friday. The negative shift seen in risk mood amid rising geopolitical tensions helps the US Dollar outperform its rivals and hurts the pair.
Gold extended its daily rally and climbed above $1,920 for the first time in over two weeks on Friday. Escalating geopolitical tensions ahead of the weekend weigh on T-bond yields and provide a boost to XAU/USD, which remains on track to gain nearly 5% this week.
Nvida's stock price opened marginally lower on Friday after Reuters reported that the Biden administration is attempting to close a loophole that allowed Chinese companies access to state-of-the-art computer chips used for AI.
In the Forex market, gold is a form of currency. The internationally accepted code for gold is XAU which is a symbol used under the ISO 4217 currency standard to denote one troy ounce of gold. It is known to be a “safe-haven” asset, expected to increase its value in times of volatility and economic uncertainty.
The XAU/USD pair tells the trader how many US Dollar (the quote currency) are needed to purchase one Gold Ounce (the base currency). The United States is the country that holds the biggest resources of gold in the world.
HISTORIC HIGHS AND LOWS FOR XAU/USD
All-time records: Max: 1920.80 on 06/09/2011 - Min: 35.32 on 27/07/1970
Last 5 years: Max: 1,645.38 on 21/02/2020 - Min: 1046.23 on 03/12/2015
* Data as of February 2020
ASSETS THAT INFLUENCE XAU/USD THE MOST
The XAU/USD can also be impacted by other elements such as the following:
Currencies: USD and EUR.
Commodities: Silver, the other most important precious metal commodity together with Gold.
Bonds: Bund (the German word for "bond", a debt security issued by Germany's federal government) and T-Note (Treasury Note, a marketable U.S. government debt security).
Indices: Hui (AMEX Gold BUGS), XAU (Philadelphia Gold and Silver Sector Index) and GDM (NYSE Arca Gold Miners Index) The most important stock exchanges are the New York Mercantile Exchange (COMEX), the Chicago Board of Trade, the Euronext/LIFFE, the London Bullion Market, the Tokyo Commodity Exchange, the Bolsa der Mercadorias e Futuros and the Korea Futures Exchange.
ORGANIZATIONS THAT INFLUENCE XAU/USD THE MOST
WGC (World Gold Council), the market development organisation for the gold industry.
LBMA, London Bullion Market Association, whose members conduct trading in this wholesale over-the-counter market for the trading of gold and silver. It is loosely overseen by the Bank of England.
COMEX (Commodity Exchange Inc.), the primary market for trading metals.
Zurich Gold Pool founded in 1968 by the largest banks in Switzerland after the collapse of the London Gold Pool.
CGSE, the Chinese Gold & Silver Exchange Society is an organisation of gold trading firms in Hong Kong who are participants of the Chinese Gold and Silver Exchange.
PEOPLE THAT INFLUENCE XAU/USD THE MOST
David Harquail, the World Gold Council’s Chairman and the CEO of Franco-Nevada Corporation.
Jerome Powell, the 16th Chair of the Federal Reserve.
Xi Jinping, President of the People's Republic of China and General Secretary of the Communist Party of China.
ECONOMIC DATA THAT INFLUENCE XAU/USD THE MOST
The main indicators that traders should watch to understand where gold is standing are:
Demand vs Supply for the commodity
Struggling markets or context of currency devaluation: gold is known to be a haven for investors in times of economic uncertainty or when any country sees its currency devaluing.
Practical applications: technology invents, jewellery use, etc.