Before investors buy or sell gold, the first step is to analyze the fundamentals. Without basic analysis, investors can't know the current situation of the market, nor can they know whether the gold market is shrinking or growing; Whether the market conditions are overheated; Whether to enter or leave now; Whether the investment funds are increased or decreased; What is the market trend? All these basic factor analysis are indispensable steps.

But the fundamental analysis also has some defects, such as:

1, the data of some gold-producing countries are difficult to obtain or time lag; Some gold-producing countries are reluctant to announce the gold production figures to the international community, or the figures are released with a certain lag, and the figures of experts can only be estimated. Therefore, when these countries are collecting foreign exchange, the amount of gold they put on the market may completely shock the market. The basic analysis in this respect is somewhat incomplete.

2. In the open market, the demand figures are difficult to be accurate; The figure of gold supply only needs to add up the annual output of major gold-producing countries to get more effective figures; However, it is more difficult to obtain demand data. For example, some enterprises will melt gold coins for industrial production, so the demand figures include the factor of double counting. Therefore, it is impossible to make fundamental analysis with accurate figures.

3. Can't tell us the timing of entering the market; After fundamental analysis, we all know that the price of gold is in the stage of big bull market. But when will you step in? Do more now, and the price may be lower the day after tomorrow. By next week, it may be the lowest price now. Therefore, fundamental analysis can only tell us the general trend of gold prices, and can not provide us with the best time to enter the market at all.

4. Can't catch the nearest peak and valley; Even in the big bull market, the price of gold will go up and down. If you can grasp the trend of each wave, absorb it at a high point and sell it at a low point, the profit you get will be much higher than what you simply hold. The basic analysis is that these subtle changes can't be captured. We can only analyze the general trend of the market, but we can't answer the reasons for the rise and fall of the market price, which is based on basic analysis. Therefore, in addition to basic analysis, gold trading needs to be supplemented by technical analysis.

I hope it helps you!