Trading gold in today’s online markets allows investors to profit from daily price movements or long term trends. Here we’ll impart everything you need to know to start trading gold. That includes trading on gold forex, futures and options, plus exploring what makes an effective strategy. We’ll wrap up with global gold trading hours and useful tips.
Gold trading has evolved to the point where traders no longer need to physically own and hold the underlying metal. Gold trading via CFDs is based on the idea of speculating on the price of Gold. The profit or loss is determined by the change in the price of Gold during the contract duration.
When trading Gold as a CFD, as with other assets you can buy in both rising or falling markets. That means you can trade when the price of Gold is either rising or falling. In a falling market you can actually short the asset, which means SELL Gold and then later BUY it at a greater value. Likewise, you can BUY low and SELL when Gold rises in value.
Start trading Gold with AvaTrade and enjoy the benefits of trading with a regulated, award-winning broker!
At AvaTrade you can trade Gold online, smoothly and effortlessly. Try Gold trading with the leading regulated broker and enjoy the following benefits:
- Trade gold with competitive spreads
- Amplify your trades using leverage of up to
- Trade on the powerful MetaTrader 4 or MetaTrader 5 platforms
- Enjoy trading Forex and commodities on the same platform, and hedge for risk management
- Trade on both rising or falling markets – go long or go short
- Trade any time you like, with our unique app AvaTradeGO
- Get 24/5 personal customer support, in your language
The History of Gold
Gold has always had an allure. Dating back to prehistoric times Gold was one of the very first metals to be mined. It was in such high demand that even the Egyptians began mining it in 2000 BC.
Throughout history many civilizations chose Gold as a reliable and universal form of money for trading goods – a great store of wealth that would never disappear and could be easily transported.
Before currencies, as we now know them came to be, The Gold Standard was the monetary policy whereby currencies were backed up by physical bars of Gold, kept in a reserve.
If a country wanted to increase their money supply, they would have to also increase the amount of physical Gold as part of the Gold Standard. This wasn’t very practical and was eventually abandoned by the United Kingdom and indeed the entire British Empire when World War I began. Most other countries also followed their lead and abandoned it over the course of the 20th century.
How to Trade Gold
There are a variety of ways investors can access Gold to diversify their portfolio. These are the main ones:
- Physical metal (bullions or coins) – A bullion is a grouping or bulk of precious metal measured in the form of a bar in weight.
- Gold certificates – These are very similar to the first paper bank notes. Started in the 17th century, these Gold certificates would act as proof of Gold ownership. Today they are still issued by certain banks, and represent a quantity of Gold bullion or coins for its owner.
- Gold futures – This is a contract agreement for the delivery of Gold at a prearranged time in the future, at a preset price. Investors use futures to manage their price risk. Since Gold futures contracts are traded at centralized exchanges, these contracts offer more leverage and flexibility than trading the commodities themselves.
- Gold-based ETFs – ETFs are a basket of assets grouped into a fund, which is managed by expert fund managers. Keep in mind the price of Gold will still continue to affect the ETF.
- Stocks – Gold mining companies are another way to expose your portfolio to this precious metal. You can buy stocks and own the underlying asset, or trade them as CFDs here at AvaTrade.
- MT4 Symbol – GOLD
- Exchange – NYMEX
- Trading Hours – 23:00 – 21:59
- Increment: 0.01
- Minimum Trade Size: 1 ounce
Why Trade Gold with AvaTrade
You can join AvaTrade today for as little as and start trading gold and other metals too.
You will get access to a range of educational tools, advanced charting packages and other benefits that are exclusive to AvaTrade clients.
We offer a range of trading platforms suitable for all levels of trader, including automated trading solutions. We are sure you will find the trading environment that suits your style and financial objective.
Get started in gold trading with AvaTrade and enjoy the benefits of trading with a regulated, award-winning broker!
Gold Trading Online
Gold trading with AvaTrade does not need to be complicated, especially if you already have some experience of the online trading market.
Gold units are measured in Troy Ounces against a currency – usually the dollar – in a similar way to a Forex currency pair. This means that every dollar will be worth a certain amount of Gold.
The price of Gold fluctuates depending on a variety of factors, which we shall look at below. It is worth knowing what moves the price of Gold, because of course, you can look for these drivers and potentially understand which way the price of Gold will move.
There are many advantages to trading Gold as a CFD rather than purchasing it outright.
- These include the benefit of not having to transport the physical Gold and then not having to store it. Highly impractical, Gold in large quantities can take a lot of space and having bars of Gold lying around in your front room doesn’t feel very safe.
- When trading Gold as a CFD, you can use the facility of leverage. This means that you can multiply your available funds, so they are effectively worth more in a trade. Leverage can multiply rewards, but be advised that it can also increase your risk.
- You can use our AvaProtect facility, which is a way to manage your risk when trading Gold. Much like taking insurance, if your trading loses at the end of the duration you set for your AvaProtect contract, your capital will be reimbursed (minus the small AvaProtect fee itself).
Finally you can trade options on Gold here at AvaTrade. That means you will purchase either a CALL (UP) or PUT (DOWN) option, using our AvaOptions platform.
You buy the option at a particular strike price. If the price of Gold goes above the strike price before your CALL options contract expires then your trade may be successful. Likewise if the price of Gold goes below the strike price before the option expires then you can lose your premium.
Fundamental Factors in Gold Trading
Various factors drive the price of Gold. These include:
- Supply and demand – Most of the global demand comes from jewelry production and manufacturing (50%), and investment purposes (40%). Increased demand with low supply can increase the price. On the other hand an oversupply, with weak demand can drive prices lower.
- Market sentiment – Political uncertainty and/or instability contributes to global growth uncertainty and can help in the rising prices of Gold.
- Market volatility– Gold has often been used as a safe haven investment when markets are unpredictable. That means when markets are shaky or uncertain, investors often run to the safety of Gold. This of course can push up the price.
- Currency movements – The US dollar is a strong influencer. When the dollar falls, commodity prices around the world increase. The US dollar and Gold tend to have an inverse relationship.
- Gold is used by investors to hedge against other positions they hold. They consider a risk management tool.
- Central banks are significant holders of Gold reserves, and the amount of Gold bought by Central Banks has increased dramatically in recent years. They buy Gold for the same reason as an investor might and that is for the flight to safety status that Gold poses. If currencies are crushed, Gold will always hold its value. However if a country decides to sell Gold and floods the market, of course this will impact the price of the asset by dropping it’s value.
Bear in mind, that trading in this market, like any other can involve risk and you should never invest more than you can afford to lose.
Here are a few tips for trading gold:
- Gold is compared to the yen since both assets fall into the category of a “safe haven instrument” and they can potentially move in the same direction. Often, you can check your trade set-ups by comparing the two.
- Focus on the behavior of the price and keep in mind that commodities can move more than currencies.
- The most popular Gold exchange rate is the XAU to USD rate. XAU is the trading terminal’s code for Gold.
Gold Trading Main FAQs
- Is it still worth it to trade gold?
Gold has been used as a medium of trade and a store of value for thousands of years, and trading gold in the 21st century is just as relevant as it’s always been. Gold remains a valuable store of value, with many investors using it as a hedge against financial crisis, inflation, and geopolitical risks. As one of the largest and most liquid markets in the world, the gold market offers traders huge opportunities. Prices can be volatile, but the market is rational, which makes trading gold an exciting and potentially profitable endeavor.
- Is gold the best precious metal to trade?
Gold is definitely the most popular metal for both investors and traders, but if you’re looking for a precious metal with a bit more “pop” then silver is also a very good choice. That said, gold is often easier to forecast since it is primarily used as a safe haven asset and a store of value. Unlike silver and the other precious metals gold does not have any large industrial use, so it has fewer factors impacting its movement. Plus the huge liquidity makes the market accessible.
- What is the best strategy for trading gold?
To trade gold successfully there are many strategies that can work. Of course if you can follow the professionals, the so called “smart money”, you’re likely to have a better chance of success. One method they use is to focus on the seasonality of gold. Historically gold makes it strongest moves in September. It is also strong in the first two months of the year. So these are the best months to look for a long setup. Conversely gold is weakest in March and October, making these good months to look for pullbacks in the market.
Are you ready to start trading gold today? Start trading the gold market with AvaTrade and enjoy the benefits of trading with a regulated, award-winning broker!