By opening an account with Exness, you can invest in Euro/Gold (XAUEUR) along with many other Forex and CFDs.

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In this article, we explain more about the financial product “Euro/Gold (XAUEUR)”.

What is Euro/Gold (XAUEUR)?

XAUEUR is a pair that represents the value of one troy ounce of gold in euros. The euro serves as one of the most important fiat alternatives to the US dollar, while gold is a store of value and is considered a hedge against inflation and geopolitical instability. Since these two assets are usually negatively correlated with the US dollar, there is often a positive correlation between them.

However, this relationship is not absolute. Because gold is not only an alternative to the US dollar, but also an alternative to the current fiat currency system. As a result, both the euro and the dollar often record losses on gold.

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What you need to know about the EUR?

The official currency of the euro area, a currency union consisting of 23 member states of the European Union (EU). After being used as an accounting currency in 1999, it was established as the official currency of the European Union in 2002, and coins and banknotes are now in circulation. It is the second most traded currency in the world and serves as an international reserve currency.

The ECB’s monetary policy decisions, eurozone GDP, international balance, consumer price index, and political conditions in member countries are factors that influence euro prices.

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What you need to know about the Gold?

Gold is considered a store of value, a hedge against inflation, and a “safe haven”. Investors typically spend money in times of social and political instability and economic crises. Such negative movements, but not always, put upward pressure on precious metal prices.

From January to May 2020, the market was unstable due to the coronavirus pandemic, but gold rose by more than 13%. This rise is attributed to investors shifting money from currency investments to alternative investments such as gold.

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What drives the price of Euro/Gold (XAUEUR)?

Gold is classified as a commodity, but generally it behaves like a currency. Precious metals have a low correlation with other commodities and are rarely used in the metal industry, but they are not tied to a particular country like currencies. Gold is a global currency asset that reflects the sentiment of the world. Yellow metal prices are heavily influenced by US macroeconomic conditions, including the strength of the US dollar, interest rates and risk aversion levels.

Other factors include government asset demand, demand levels in the luxury goods industry, use in technology and industrial products, and the amount of gold mined, which influence the price of gold. Gold is produced in the top five countries of China, Russia, Australia, the United States and Canada. The supply of newly excavated gold affects the spot price of gold, but it is most often the gold reserves and their allocation on the ground that affect the asset price more than the production itself.