Gold is one of the most precious materials in the world. This beautiful yellow metal has been prized for millennia. When the markets are in turmoil, gold is seen as a haven for investors.
This is why gold prices usually rise when stocks and shares take a tumble. There was a time when gold traders had to find a safe place for their gold bars and coins, but not anymore.
These days, gold traders can trade via CFDs, speculate on gold prices, and more.
Here is a guide to trading gold online.
Why Gold?
The gold market is very liquid, and there are huge opportunities to profit. Gold is always in demand, so there is no scenario where gold is valueless, which is more than can be said for stocks, shares, and cryptocurrencies.
But gold has unique properties, and it’s important to know how it reacts under certain market conditions and the many pitfalls associated with gold trading.
Factors Affecting the Price of Gold
As we have alluded, gold is very susceptible to market sentiment. People tend to buy gold when they fear a market crash. Physical gold is safer than electronic investments.
You won’t lose your wealth when a bank goes under if most of your money has been converted to gold. The more individuals and governments buy gold, the more expensive it becomes.
Anyone trading XAU/USD via a forex broker will know how gold reacts to world events, economic influences, and other factors.
To illustrate this, gold prices rose after the 2008 world recession. Once the markets leveled out again in 2011, gold prices peaked and began to fall again. Gold prices also react to inflation and deflation.
Follow Gold Price Trends
Look at historical price trends. Past trends are often repeated in the future. Analyze previous price movements and see if they correlate to specific events or economic patterns. Gold prices often experience long upturns followed by equally long downturns.
The key to success is hitching your wagon at the optimum time. There are also short, sharp gains and losses, which savvy traders can take advantage of. But unless you are familiar with trends and common reactors, you won’t be able to do anything.
Trading Options
Trading gold is often viewed as a long-term strategy. Gold isn’t as volatile as some other assets, so buying gold and keeping it as a long-term investment is common.
If you prefer not to own physical gold, you can trade in gold via the futures, options, and equity markets. You can also trade gold as a forex pair if you open an account with a forex broker.
Trading gold via a forex broker is a quick and easy way to exploit gold price fluctuations.
Gold is pegged to the USD, so look for a broker that offers XAU/USD with competitive spreads. Smart investors always include gold in their portfolio but trade gold in the forex markets if they seek short-term gains.
Check our complete guide on buying gold and silver if you prefer buying and investing in gold instead of trading.
