What is Gold trading

Gold is amongst the most precious metals in the world. Gold trading is the process of buying and selling gold to earn profit from price fluctuation.

Under gold trading, a trader speculates the price change of gold by studying several factors. If the prediction is right, the trader will earn money; otherwise, he will suffer a loss.

The scope of trading gold is increasing these days. There is no need to buy metal nowadays for trading physically. You can trade in gold through a Contract of Difference. 

The price of gold is affected by a number of factors such as economic conditions, political issues, natural calamities, etc.

Gold Trading

Is trading in gold risky?

Gold trading can be risky due to factors such as rapid price fluctuation, market manipulation, government regulations, etc. However, compared to forex, the stock market and trading of other metals, trading in gold is less risky.

The price of gold is comparatively stable. The unexpected events, financial instability, and economic recession have little impact on gold trading prices. Therefore investing in gold is considered best among all trading commodities.

Gold trading hours

Gold trading is a 24-hour and 5 days market. You can trade in gold at any time. However, the best time to trade gold is during the New York session’s active hours.  

Most of the trades are placed during New York trading hours. The time of trading gold also depends on your type of trade and goals. One should trade within the New York session for high liquidity and low volatility.

A quick glance

Gold trading is the process of buying and selling gold to earn profit from price fluctuation.

Gold trading involves risk as the price fluctuates due to different factors. However, it is less risky compared to forex, stock market and commodities.

You can trade in gold at any time. However, the best time to trade gold is during the New York session’s active hours. 

  • Gold Bullions
  • Gold ETfs
  • Gold stocks
  • Gold Futures
  • Gold options
  • Gold Spot

Steps to follow to start trading in gold 

  • Market Education
  • Market Analysis
  • Determine the way to trade
  • Select a trading platform
  • Place the trade
  • Supply And Demand
  • Central Banks Reserve 
  • Change in Currency Value
  • Economic Uncertainties
  • Plus500
  • Pepperstone
  • FP Markets
  • IC Market
  • Eight Cap

Ways to trade in gold

There are many ways by which a trader can trade in gold, such as gold forex, Gold spots, Gold ETFs, Gold futures, etc. 

In order to determine the best way for gold trading, it is a must to understand each product with its features and utility. Have a look at the types of gold trading. 

Gold Bullions: Gold Bullions are one of the most popular and traditional ways to trade gold. Under this, traders buy and sell gold in the form of coins, biscuits, bars, and jewellery.  

Suppose a Trader has some savings and he buys Gold jewellery from it. When the price of gold increases, he will sell it to earn profit.

Gold Forex Trading: Under this, a trade speculates the price of gold in relation to the currency. It is a process of buying and selling gold similar to currency trading.

XAU is the currency code for gold to trade in gold forex. For example, you are exchanging gold for Dollars to make a profit. Then the currency pair will be XAU/USD or USD/XAU. 

Suppose a trader is dealing in XAU/USD. If he thinks that the price of gold will increase against USD, he will buy the pair; if not, he will sell it. 

The risk in gold forex trading is comparatively higher than in physical trading. So for trading, research and analysis of the market using Gold trading charts is essential.

Gold ETfs: Gold Exchange-Traded Funds are one of the most common types of gold trading. Under this, ETF holds the physical gold and trades like a stock on an exchange. A trader can trade in gold without owning it in a physical form.

Gold stocks: The buying and selling of the stock of companies engaged in gold exploration, mining and distribution is called gold stocks trading. 

When the price of gold rises, these companies earn more and vice versa. Based on these predictions, traders invest in the stock of the companies.

Gold Futures: It is a type of agreement to buy or sell gold at a predetermined price in future. Gold Futures contracts are mainly traded on OTC markets such as the Chicago Mercantile Exchange, London market, Shanghai Gold Exchange, etc.

Gold options: This type of contract gives you the right to buy or sell gold at a specific price on a specific date. However, options only give the traders the right, but they are not obligated to exercise it.

Gold Spot: One of the most popular types of gold trading online is the gold spot. A trader can buy or sell gold immediately rather than at a specific future date. Under this, spot price refers to the current price that a buyer can trade in gold.

How to Trade in Gold

How to trade in gold

There are following steps you need to follow to start trading in gold. Remember, your trade success will depend on your plan, so take time and follow all the steps effectively.

Market Education: The first step is to learn about Gold trading, its market, its ways and how it works. Learning is a must for earning. Proper research and analysis of the gold market is important.

Market Analysis: Analyze the Gold market to determine what causes fluctuation in the gold price and study these factors.

Determine the way to trade: As we have studied, there are many ways to trade in gold, such as future, option, spot etc. Select the best way according to your need to start trading.

Select a trading platform: Open a demo account with a trading platform. If you are satisfied, open a micro account and start trading.

Place the trade: Monitor the market to determine the gold trading opportunities. When you find the right opportunity, place your trade. If you believe that the Gold price will rise, then buy it or if not, then sell it

Factor affecting gold trading

Supply And Demand:  Unlike currency trading, which the government can print, the supply of gold is limited. The change in the demand and supply of commodities results in a change in the price. 

When the demand for gold increases, the price also increases. When the supply of gold increases, the price decreases.

You might have heard about countries where gold is very cheap. It is because of the easy availability of gold. The country where the price of gold is high is because of a lack of ability.

Central Banks: One of the major players in gold trading is the central banks of different countries. These banks hold physical gold to deal with uncertainty and boost the economy.

Central banks limit the supply of gold when they increase their reserves. As a result, the price of gold increases or when they decrease their reserve, the price of the gold falls.  

Currency Value: The change in the value of some most traded currencies also affects gold trading. Especially the fluctuation in US Dollars has an inverse relation with gold trading.

When the value of the US Dollar rises the price of gold decreases, and when the value of the US Dollar falls and the gold price rises. 

Uncertainties: Unlike any other asset, gold is quite stable, which means at the time of economic uncertainties, and unexpected events, the value of gold rises or remains the same.

To fight against inflation or other uncertainties, investors and traders store gold. As a result, the price of gold rises.

Best gold trading platform

Before selecting the best gold trading platform, it is essential to check factors such as regulation, brokerage, customer support, previous performance, reliability, gold trading live services etc. 

There are many gold trading platforms available to start trading. However, based on services, policies and features. Here are the top five best gold trading platforms to start trading with

  • Plus500- Excellent Gold trading app
  • Pepperstone- Great for Beginner traders 
  • FP Markets- Best for Advanced traders 
  • IC Market- Best gold trading tools 
  • Eight Cap – Best for MT4, MT5 traders

Bottom Line

Gold is considered a safe haven asset. During market turmoil and uncertainty, when the price of other assets declines, their value remains the same or increases. At Least your capital is preserved during uncertainties. 

However, a trader engaged in Gold trading needs to understand that the price is affected by market instability. Like any other trading, the risk is associated with it. Analyzing the market before investing your money to manage your risk is essential.

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