Improvements in the price of gold or gold fixes are indeed being discussed. During 2011, when gold was at the peak of popularity, multi-year bullish was amazing and had made gold prices rise from $ 300 to almost $ 2000 per ounce. There are some people who think that the value of gold will continue to increase to $ 5000 per ounce. Even to prove it, there is someone who dares to say “if you buy gold today, and sell it tomorrow, then you will get many benefits”. Is he right?
REPAIR OF GOLD PRICES AND TIME EVERY DAY
We can test this theory by doing a little experiment. Let us calculate how much profit and loss the average price we will enjoy if we buy gold at different times throughout the day from 2011 to 2016. The fund manager uses London time for example, and will use Universal Time (Greenwich Mean Time) . The first experiment was carried out by holding a gold for a period of 4 hours. On average from midnight to 4 am gold will drop 0.01%. Then, if you buy at 4 am, 8 am, and noon then it will result in an average double increase, which is 0.02%. If buying at 8 o’clock in the evening will not produce any changes. So far, it seems the investment manager’s statement about the value of gold that tends to rise towards the end of the day is not true.
Let’s repeat the experiment and calculate the average shelf life of 16 hours. This example will allow gold to be bought at 4 pm and sold at 8 am. So in this way we will really be able to test the hypothesis with some test results.
Buying early in the morning then selling it at 4pm will result in a profit of 0.02%.Then buying at 8 pm and selling it in the early hours will result in a profit of 0.04%. Different when buying during the day and selling it at 4:00 a.m. will produce a profit of 0.03%. Last buy at 4 pm and sell at 8 am will result in an increase of 0.2%. Finally, buying at 8pm and selling it during the day will result in a profit of 0.01%.
So based on the analysis above, the trust of the fund manager in increasing the value of gold is wrong. Maybe the fund manager will be considered appropriate if represented by several years before 2011, but in fact we can see that buying at 4 am and selling at 8 pm will generate more profit. However, in year-end purchases it will indeed give the best short-term results.
As has happened, you will not be able to make money using a buying and selling strategy like this every day, because retail spreads in gold are equivalent to an average of 0.05% which is the maximum profit obtained. Does this investment teach us about how time each day can be used as a factor in the gold trade?
IMPROVE GOLD PRICES
The gold market spot is very unusual because there is a process called gold price improvement that occurs twice every working day, ie at 10:30 and 15.30 London time. Improving the gold price will make each Bank match all buyer orders and their sales and get a price more than that, then the process will be repeated between banks to then provide prices that represent the whole and reflect the balance.
The first change is one hour after the last Gold Fix at 4pm London time. After that you will not be able to go further than the gold fix at 4 pm. Most likely the purchase at 4 pm is the right step, but it cannot be justified, or it will be boring. At 4pm London time is usually 9am New York time. At that time, the world financial center was running. Therefore, concluding at 4pm as the right time allows it to give the most crowded time but will turn around to produce the strongest price movements. Since 2001, the general direction of the price of gold has risen, so it may be that the directed trend generally starts at 4 pm.
That is a few points from the improvement of gold or gold fix prices that you can get knowledge. Add more knowledge about this business from the next article. You can also start trading gold to find the best investment path for you.