Once upon a time, trading gold was difficult: you had to buy and sell the metal itself then came futures and options, allowing traders to take positions without ending up with a safe full of bars, coins, or jewelry. Gold exchange-traded funds made it even easier; Trading gold was a lot like trading a stock. Today, trading gold is almost nothing different from foreign exchange trading. You can consider the Gold selling price there now.
Use of Betting Platform
If a retail investor uses a spread betting platform, it is simply a matter of buying or selling, depending on whether you think the price of gold could go up or down. For some people, trading gold is attractive simply because the underlying asset is physical and not a number in a bank account. There are a variety of strategies for the gold trade, from studying the fundamental factors that affect supply and demand to studying the current position of gold traders, technical analysis and the study of gold.
Even for those who rely primarily on the fundamentals, many experienced traders agree that a better gold trading strategy is to incorporate some key components reaching feeling and technical analysis. A gold trading tip we offer is that fundamental and sentiment analysis can help you spot trends, but a study of the gold chart and price patterns can help you enter and exit specific trades.
Gold trading vs. Forex trading
Gold has traditionally been seen as a store of value, precisely because it is not subject to the whims of governments and central banks as currencies are. Gold prices are not directly influenced by fiscal policy or monetary policy and will always be worth something, unlike a currency that can end up being almost useless, for example, due to unbridled inflation.
Gold can also be used by traders as a “safe haven”, along with assets such as the Japanese yen, the Swiss franc and banknotes and bonds issued by the US Treasury. This means that when traders are concerned about risk trends, they tend to buy asylum assets. On the other hand, traders generally tend to sell safe assets when risk appetite increases, opting for stocks and other currencies with a higher interest rate. This makes gold important protection against inflation and a valuable asset.
Note, however, that although it is possible to trade the Swiss franc or the Japanese yen against a variety of other currencies, gold is almost always traded against the US dollar. Therefore, trading gold means that you will need to take into account the movements of the US dollar. For example, if the value of the US dollar is increasing, it could reduce the price of gold. Stay up-to-date with the US dollar and major gold levels on our gold market data page.
How to trade the gold
An additional factor to take into account when learning how to trade gold includes market liquidity. The World Gold Council estimates that the average daily gold trading volumes are higher than in any currency pairs other than EURUSD, USDJPY and GBPUSD. This makes it higher, for example, than the daily volume traded on EURJPY, so spreads the differences between bids and ask prices are narrow, making gold relatively cheap for trade.