Today, gold is used in jewellery, as an investment, and even in industries such as medicine and electronics. For a long time, precious metal was used as money.
But what makes gold investment so special? In comparison, why aren’t silver or palladium the most popular precious metals?
Gold has always been considered attractive in terms of colour and luminosity and is also almost indestructible. It is rare enough that producers don’t flood the market with it and reduce its value, but it is plentiful enough to keep the market liquid.
People also have an emotional connection to gold, and it is still important in many cultures today.
Today, Trading gold has become key to improving investors’ portfolios.
What is gold trading?
Gold is one of the oldest and most trusted commodities in the world. For traders, gold’s intrinsic value – or its “safe haven” appeal – makes it a popular investment and a great way to diversify your portfolio.
There are two main ways to do investment in the market. The first is buying physical gold, or shares in a mutual or exchange-traded fund that follows the real-time price.
The second is to take advantage of price fluctuations in the commodity trading market and trade derivatives linked to gold, such as futures, CFDs, options and more. Two of the most popular gold derivatives are CFDs and futures.
How does this market work?
Gold is primarily traded over-the-counter (OTC) and on exchanges. London is the global centre for the OTC market, where market participants trade directly with each other. While this market is less regulated and more flexible, counterparty risk is higher.
Exchanges are regulated platforms and trading gold is centralized. They usually offer a standard contract which is not suitable for all traders as it limits their flexibility.
Besides London, the other two major centres for trading gold are New York and Shanghai. The COMEX is in New York and the Shanghai Gold Exchange is in Shanghai.
Getting started with gold trading
Different strategies for trading gold and assets are required for beginners looking to buy and sell gold as a regular asset in their portfolio. Let’s learn the basic steps to start trading gold.
Find the right broker:
Trading gold is available on most trading platforms. Axi offers a variety of trading instruments, meaning traders can trade currencies, metals, stocks, cryptocurrencies, and commodities all in one place. Easy registration for a live trading account. If traders want to trade in a separate trading account, they always have the option to create a sub-account where they can only trade gold.
Choose how you want to trade gold:
Before traders start trading gold, it is important that they understand the differences between the two gold products offered as CFDs. Spot CFDs generally have a lower spread than futures CFDs, but are subject to daily swap fees. Futures CFDs have a higher spread than spot CFDs, but no daily swap is charged.
Start testing your trading strategy by trading gold:
Traders may prefer to do this on a demo account first. This is an important step as it tells you if your strategy is gold compatible or not. When using fundamental analysis, they should follow gold news and events, and learn about the correlation of precious metals with other asset classes.
Open Your First Gold Trade:
Once traders are ready and have installed the Axi MT4 platform, they can find a spot product under the symbol “XAU/USD” or XAU/xxx for traders. Other currency pairs and futures CFDs under the tag “Gold.fs”.
