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Definition – What does Gold mean?

Gold is a precious metal that plays an important role in world markets. Scientifically speaking, gold is an element just like any other, but its value to people goes far beyond that. Along with being useful in manufacturing and jewelry, gold is perceived as a hedge against inflation.

ForexTerms explains Gold

At one time, the major world currencies were all on a gold standard. Now, however, world currencies are largely fiat currencies, meaning their value is exactly what the market decides it is. That said, gold still plays a role in the forex market. It is often viewed as an alternative to the U.S. dollar, so rallies in gold can be linked to weakness in the USD. This relationship isn’t always as defined as it sounds but watching gold activity can give traders insight into the psychology of other markets. Traders can also trade gold directly against a currency as in XAU/USD.

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