Gold, traded under the ticker symbol XAUUSD, is one of the most ancient and versatile assets traded by humankind.

The precious metal plays an important role in modern-day capital markets in investment and trading. Traders speculate on its price movements for financial gain. Gold can be traded in its physical form, or through various instruments linked to or influenced by the gold price, such as derivatives.

One of the most popular derivative instruments used for gold trading are contracts for difference (CFD).

The following factors can cause significant fluctuations in the gold price:

Supply and demand
Gold demand outstrips its supply, and this supply shortage underpins gold prices. If demand for jewellery, electronics, central bank reserves, and investments, such as exchange-traded funds (ETFs) go up, the price would also rise. If the demand goes down, it will drop.

Fed rate policy, comments
The US Federal Reserve's interest rates are crucial for the gold price. Higher interest rates reduce demand for gold, which pays no interest.

The US dollar
Gold contracts are priced in US dollars, and for this reason, they move inversely to the greenback.

Economic or political instability
Gold is classed as a safe haven, and its price rises amid economic downturns, or political instability.

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