Trade in Gold

 

Learn what gold investing and trading is

Gold investing and trading are two different ways to take a position on the future price

movement of gold markets.

When you invest in gold, you’d take ownership of the asset upfront and profit if the precious

metal rises in price. When you trade gold, you’re taking a position on the underlying price

rising or falling – meaning you won’t be taking ownership of the asset itself.

There are several types of gold assets available for you to trade or invest in, depending on

whether your interest is in the physical asset or not. These include:

Gold bullion

 

Physical gold – in the form of coins and bars – is commonly used as a store of value, for

both individual investors and banks. But the expensive safekeeping and insurance

requirements often deter more active investors from buying the metal outright

Spot gold

 

The spot price of gold is how much it would cost to buy upfront – or on the spot. It is usually

the price of one troy ounce of gold. Trading spot gold is a popular means of getting exposure

to bullion without having to take ownership of the precious metal

Gold futures

 

Futures contracts enable you to exchange gold for a fixed price on a set date in the future.

You’d have the obligation to uphold your end of the deal, whether that’s through a physical

or cash settlement. Futures contracts are standardised for quantity and quality – only their

price is driven by market forces

Gold options

 

Options contracts work in a similar way to futures, but with no obligation to execute the trade when

buying. Options give you the right to exchange either physical gold or gold futures at a specific price

on a specific date. Call options give the holder the right to buy the precious metal, while put options

give the holder the right to sell it

Gold ETFs

 

Exchange traded funds (ETFs) track the movement of a basket of shares of publicly traded

gold mining, refining and production companies. Trading or investing in an ETF gives you

much wider exposure than you’d get from a single position, which makes them a popular

way of diversifying a portfolio. ETFs are passive investments, which replicate market returns

rather than seeking to outperform them

Gold stocks

 

Trading on or investing in stocks can be a great way to get indirect exposure to gold. You can gain

exposure to every element of the gold industry, from mining and production to funding and sales.

It’s important to note that gold stocks don’t always move in the same way as bullion, as there are a

lot of other factors that drive the prices of shares.

Understand what moves the price of gold

The price of gold is determined by supply and demand. There are a huge range of factors

that can impact the market price, including:

Global demand

Mining production

Interest rates

The US dollar

Financial stress and political insecuritySince the 1970s, the demand for gold has quadrupled every year – driving up the gold price.

Gold is used all over the world for a variety of reasons, such as jewellery, technology and as

a value store for central banks and investors. In fact, jewellery demand accounts for roughly

50% of the global demand, while 29% comes from exchange traded funds (ETFs).1

A large portion of gold demand comes from middle-class expansion in India, China and

South-East Asia.

Gold as a safe haven

 

Investors tend to rely heavily on gold in times of political or economic uncertainty, and the

metal is often used as a hedging tool against inflation or currency devaluation.

For example, gold increased more than 13% between January and May 2020 during the

Covid-19 crisis, due to rising market volatility. Investors started pulling money from cash

assets in favour of the precious metal in order to combat the political, economic and social

instability.

Conclusion

 

However, when any investment becomes too popular there’s the risk of a price bubble being

created, which could send prices spiralling when it bursts. For this reason, many gold traders

choose to diversify into other markets or manage their risk with stop-losses.

Trading vs investing in gold

You might want to trade gold if:

 

 You want to speculate on the price of gold rising or falling

 You want to leverage your exposure

 You want to take shorter-term positions on gold

 You want to hedge your portfolio

 You want to trade without owning the underlying asset

You might want to invest in gold if:

 

 You’re interested in buying and selling gold stocks and ETFs

 You’re focused on longer-term growth

 You want to build a diversified portfolio

 You want to take ownership of the underlying asset

 You want to gain voting rights and dividends (if paid)

Find out more about CFD trading

Create your gold trading CFD account

 

Start trading in gold by filling out our online form – you could be ready to trade CFDs.

If you’re not ready to trade live gold markets, you can build up your confidence in a

risk-free environment by creating a demo account.

Receive actionable ‘buy’ and ‘sell’ signals on gold markets

Open your first trade

 

There are a variety of gold markets you can trade with us, including our proprietary

spot prices, futures contracts and options. Alternatively, you could get indirect

exposure to gold via company stocks and ETFs.

Whichever gold market you decide to trade, it’s important to think about whether

you’ll go long or short, what position size you’ll take and how you will manage your

risk. We offer a range of solutions for risk management, including stop-losses and

limit-close orders – these are used to close trades at predetermined levels of loss

and profit respectively.

 Spot gold

 Gold futures

 Gold options

 Gold stocks and ETFs

Our gold spot prices are based on the price of the two nearest futures. They’re useful

for taking shorter-term positions as there are no-fixed expiries. Plus, you can perform

technical analysis over a longer timeframe, as you’ll get continuous pricing across

the market’s entire history – rather than just the duration of a single future.

Once you’ve created your account and logged in, you can trade gold spot prices by:

1. Searching for gold or finding it under ‘commodities’ in the left-hand menu

2. Selecting ‘spot’ at the top of the deal ticket in the right-hand panel3. Choosing your trade size

4. Opening your position by clicking ‘buy’ or ‘sell’

Learn more about commodities trading

Choose whether to go long or short on gold

 

When you start trading gold or gold-linked assets via CFDs, you’ll be able to choose

between buying and selling the market – also known as going long or short. You’d

buy if you expected the asset’s price to rise in a given timeframe, and you’d sell if

you thought its price was going to decline.

To understand which way the market is likely to move, it’s important to do thorough

research – both technical and fundamental.

Monitor your trade and close your position

 

Once you’ve opened your position, you can monitor your profit and loss in the

‘positions’ section of our platform.

While your position is open, you should keep up to date with news and continue

performing technical analysis so that you can identify key turning points in the

market.

Ready to open your first trade? Create an account now

When you decide it’s time to close your position, you can click ‘close’.