Some traders prefer to hold physical metals to hedge against inflation or to diversify their trading portfolio. However, this way of precious metals trading is rather complicated. That’s why the most common way among traders is to trade CFDs on gold and silver. This means that they can speculate on the price of gold and silver rising or falling using a derivative (CFDs), without actually owning the asset.

Что такое CFD?

A CFD refers to a contract between a trader and a broker. CFD traders speculate on the price movements of gold or silver. For example, with gold trading online, those traders that believe that the price of gold will move upwards will buy the CFD. In the opposite scenario, they will sell an open position.

By the end of the contract, the two parties involved should exchange the difference between the price of the asset at the time the contract started and the price of the asset at the end. The net difference between the two prices is settled through the trader’s trading account.

How CFDs trading on gold and silver works

To better understand how CFD trading works, traders could try opening a demo account with a broker so as to put their skills to the test within a risk-free environment. Opening a trading account with a broker also means that traders will have access to various educational materials and trading tools as well as to the latest market research and analysis. You can then:

• Choose from a wide spectrum of trading instruments
• Buy or sell through order tickets
• Apply risk management strategies

All these come without risking any losses. Trading on a demo account is perhaps the easiest way to familiarise yourself with how the market works as well as with the factors that drive the market.

Advantages of trading on CFDs

As already mentioned above, numerous silver traders or gold traders, trade gold and silver as commodities through CFDs. The main reason behind this is that they can trade with leverage, meaning that they can trade larger positions while having a rather small initial deposit so as to potentially increase their revenue. However, there are always risks involved.

Similar to options and futures, CFDs are another derivative used to speculate on commodities prices. For instance, let’s assume that a trader opens a long CFD position on gold when its price was £1,500 and closed the position when the price reached £1,600. The price difference of £100 would then be the trader’s profit.

When traders trade CFDs on gold and silver they also need to bear in mind the costs of trading.

Factors affecting the price of gold and silver

There are numerous factors that drive the price of gold and silver. Read below to find out some ways in which the metals market is affected.

To start with, supply and demand drive the prices of all commodities. A lack of precious metals or a rise in the demand for them is what makes the metals more valuable. If, for example, there is an interruption in a big silver-producing region by political issues, then the price of silver may increase in the short term. A possible new extraction technique though could bring the opposite result. Taking another example, if there is an increased demand for metals like gold in sectors such as electronics, this could also move prices upwards.

Gold is considered a popular metal in the precious metals market. As expected, therefore, its prices are connected to other markets, such as the silver market. It is more likely that silver or platinum respond to changes in gold prices rather than the other way round. However, there are additional factors that affect the price of gold and silver such as:

Economic uncertainty

Since the two precious metals, gold and silver, are considered as safe havens, there might be an increase in their prices during periods of economic uncertainty or political instability. Likewise, in times of high inflation or recessions, there might also be a rise in the price.

Strength of the USD

Gold is denominated in US dollars. This means that when the USD decreases, then the price of gold goes up.  The dollar is a rival safe-haven asset to gold.

Quantitative easing

During times of inflation, more and more traders might be attracted to gold and silver. Quantitative easing also referred to as money printing, weakens the currency’s value. Metals are used by traders as a hedging mechanism against inflation.

Industrial output

As already discussed earlier in this article, there are many industrial usages of gold and silver. The manufacture of automotive parts, medical devices, jewellery or electronics construction are some of these usages. Also, more and more new applications are constantly being developed. The more the demand for these goods grows, the more the demand for precious metals will be as well.

Benefits of trading gold and silver with IronFX

• 500+ instruments on 6 asset classes
• MT4 trading platform
• Variety of trading accounts
• Advanced educational material
• Exclusive research and analysis by experts
• 24/5 multilingual customer support
• Tailored educational insights for beginners and professionals

DISCLAIMER:

This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.

The post How to Trade CFDs on Gold and Silver appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

Traders can trade metals on CFDs, meaning they can speculate on the price of metals, rising or falling, without owning the actual assets. For instance, metal traders can trade CFDs on gold or silver, in the direction they believe the market will go, by going either short or long.

Read below to learn more about online metal trading as well as the benefits involved in trading metals and the factors affecting metals’ prices.

Commodities in metal trading

Gold trading

This is perhaps the most popular metal in gold trading online. It is well-known as a base for jewellery and as a form of currency as well. Gold’s price is set by the market every day of the week 24/7. The price of gold is not influenced by supply and demand. This occurs because the supply of new mines cannot keep up with the growth of the above-ground gold reserves. To put it another way, when people sell, the price drops, but when they acquire a fresh supply, it is quickly consumed and the price of gold increases.

Silver trading

Price changes for silver are more unpredictable than those for gold. This is due to the dual perceptions of silver as a metal for use in industry and as a store of value. It is also noteworthy that silver’s uses have an impact on its price, indicating that silver is utilised for purposes other than fashion or as a store of value. Silver traders choose silver because as experts claim, it is a limited source meaning that its value will continue to rise in the long term.

Platinum & palladium trading

Due to their industrial uses and their use in jewellery making, platinum and palladium are also quite important. The most volatile of these precious metals are platinum, although palladium, a less well-known metal, has greater industrial use. Supply and demand have the biggest role in determining the price of platinum in trading. Due to its difficult extraction and separation processes, which require a significant amount of energy, platinum only exists as an alloy with other metals, unlike gold.

Is metal trading worth it?

Precious metals trading is considered a good financial choice for traders all around the globe. Gold, specifically, which is considered a safe haven asset, is very often chosen during times of market uncertainty. Also, metals’ application in jewellery and other industries makes their demand extremely high. If traders know their goals and risk before they start, trading metals is a good investment choice.

Moreover, a metal trader usually chooses trading metals because they offer protection against inflation, which is a fundamental value. They also resist financial or political upheavals.

Which are the benefits of online metal trading?

Protection against Inflation

Trading precious metals or trading gold forex might help you reduce your exposure to unpredictable economic swings when inflation impacts your other financial assets.

Diversification Opportunities

Gold is particularly well-liked due to its reputation as a reliable commodity to hedge against currency depreciation or excessive inflation, making metals trading an essential part of portfolio diversification.

Increased Liquidity

Because precious metals are liquid, there is interest in the precious metals market.

How is the price of commodities in metal trading affected?

Precious metal prices are influenced by a variety of factors. Let’s think about the following:

Supply & Demand

Precious metals appreciate in value when they are scarce or in demand, just like any other good or service.

Economic Instability

Due to their long-term value, precious metals are typically seen as safe haven assets during periods of economic and political upheavals.

Industrial Production

The production of jewellery, electronics, medical gadgets, and automobile parts are just a few of the industrial applications for precious metals. New applications are also always being created. The demand for precious metals rises along with overall demand.

Strength of the US dollar

Because precious metals are dollar-denominated, changes in the US dollar’s value have a greater impact on them. Precious metals are a suitable place to deposit dollars when the dollar value declines, which will probably result in a rise in the price of precious metals.

Choosing metal trading

In times of economic instability, precious metals are typically regarded as a safe haven and offer economic insights. Even when the markets are down, many wise investors trade precious metals to diversify their portfolios and hedge their positions. A practical and efficient approach to do this is using precious metals. Being certain that you understand your objectives and risk management profile before starting out is essential for potentially succeeding in this situation. It is possible to generate revenue by taking advantage of the precious metals’ volatility. Losses may also result if, on the other side, it is not controlled.

Online metal trading has risks, just like any other type of trading. There is always a possible risk associated with precious metal trading, despite the fact that they come with “insurance” and some degree of security. Metal prices may decrease as a result of technical imbalances. This is advantageous for sellers because prices are typically high during uncertain economic times.

DISCLAIMER:

This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.

The post How to Get into Online Metal Trading? appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

Forex brokers such as IronFX offer online metal trading and gold forex pairs such as the XAU/USD, allowing traders to use gold in their trading strategy. Gold has a fixed global volume and it cannot be increased as opposed to the way a government will print more paper money.

If you want to take advantage of online metal trading or precious metals trading or opportunities with gold, here are 7 trading tips to have in mind.

1. New York and London trading hours

Generally, gold is a fairly liquid asset. However, it often has the greatest price fluctuation at the beginning of the London session (07:00 GMT), and even greater volatility when the New York session begins at 12:00 GMT. Due to the high volume, liquidity, and volatility during the overlap of the London and New York markets (12:00–16:00 GMT), this is a particularly attractive time window for day trading gold forex.

2. Targeting previous highs and lows

A low-risk strategy is to target previous highs and lows as the XAU/USD tends to trade in a range. Since it’s a stable asset, it will reach these previous highs/lows over time. However, this can take time and is not ideal for day-trading gold forex.

3. Using moving average crossovers

Moving averages are indicators used in technical analysis and help sort out short-term fluctuations in order to draw attention to a longer-term trend. A simple moving average (SMA) crossover is a signal to buy or sell the underlying asset, gold. For example, traders will build a trading signal based on moving average crossovers, by taking a long position if the shorter moving average is above the longer moving average and vice versa.

4. Geopolitical events

When there is political or economic uncertainty, traders turn to gold as a safe-haven asset. Since gold is strongly correlated to the US dollar, and other stable currencies such as the Japanese yen, opening a position and trading gold forex (XAU/USD) can be a reliable way to protect your assets from forex market volatility.

5. Using the symmetrical triangle chart pattern

A triangle chart pattern shows price moving into a tighter range and is a “continuation pattern.” This means that after the pattern is completed, the price will continue in the direction it was moving before the pattern.

Now, a symmetrical triangle is a chart formation where both the slope of the price’s highs and the slope of the price’s lows come together to form a point which looks like a triangle. This is a battle between buyers and sellers as neither of them is pushing the price far enough, so we have a clear trend. As the two slopes get closer, a breakout is near, but the direction of the breakout is not clear.

6. Demand for Gold

Prices can be affected by the demand for gold, whether this is increased market demand for consumer projects or for use in the medical and tech industries. Another interesting sign is when central banks start buying gold in large amounts. This may indicate that governments expect currency values to fall. When central banks buy gold, this pushes the price of gold higher, at least in the short term, which creates a trading opportunity.

7. Gold-interest rate correlation

Gold prices tend to rise when interest rates fall, and prices fall as interest rates rise. Historically, gold prices have risen when the real interest rate has fallen below 1%. By watching this interest rate as it changes over time, you can detect trading gold forex opportunities.

If a real interest rate is above 2%, then the value of gold falls. Many experts will suggest selling on XAU/USD if the real interest rate reaches this level.

Conclusion

Although the price of gold is influenced by different factors than those of forex, many rules that apply to forex also apply to gold. Traders who want to try trading gold forex CFDs should consider XAU/USD as a good start. By analysing the price movements of gold, they can start developing a trading strategy to explore trading opportunities.

If you are starting out in CFDs, торговля на рынке Форекс or trading gold forex, then registering with a reliable broker with a wide range of educational resources is a great way to explore trading opportunities. Recognised and leading brokers usually provide in-house and independent research and analysis, which you can use to develop your own strategy and expand your knowledge. IronFX has a longstanding tradition of excellence in online trading and can offer new traders the support they need to start trading gold forex and other financial assets.

Benefits of trading gold forex (XAU/USD) with IronFX

• MT4 trading platform
• Variety of trading accounts
• Free Deposits and withdrawals*
• Advanced educational material
• Trading Central tools and research analysis
• Exclusive research and analysis by in-house experts
• 24/5 multilingual customer support
• Tailored educational insights for beginners and professionals

DISCLAIMER:

This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.

The post 7 Tips for Trading Gold Forex (XAU/USD) appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

The underlying reason for introducing the Gold Standard was to keep inflation under control as paper currency had to be limited to the gold bullion with the Treasury, although this practice has now been discontinued. Despite the discovery of more gold reserves in places such as the US, experts have declared that only around 55,000 tons of gold remain and is arguable whether these can be extracted.

Nowadays, online metal trading is gaining more and more popularity and gold is less of a status symbol and more of a safety mechanism. This is because the value of gold has risen owing to its scarcity. Gold is now traded on CFDs, which no longer requires owning the physical asset.

What are the different ways of trading gold?

Gold trading is the process of generating revenue from the difference in the price of gold due to market fluctuations. There are multiple ways for silver traders or metal traders to trade gold, such as:

Gold ETFs

The main point of consideration in an ETF as against mutual funds is that its units are listed and tradable on the exchange.

It is a good investment option for short-term investors as there is no bar on withdrawals; hence it is highly liquid.

Gold loans

These are sovereign gold bonds which the government offers to the public via the London Stock Exchange and typically come with an interest rate that forms a regular source of income for investors.

These are most suitable for mid to long-term investors as there is usually a lock-in period for such investments.

CFDs

Contract for difference is the most common route for seasoned traders as they keep track of market price movements and know exactly when to enter and exit the trades.

Trading gold via CFDs is based on the idea of speculating on the price of gold, rising or falling. Traders’ profit or loss is determined by the change in the price of gold during the duration of the contract. When trading gold CFDs, you can buy in both rising and falling markets. The same happens with other assets.

In other words, a contract for difference is a financial derivative that enables traders to trade on margin, providing them with greater exposure to precious metal trading and the gold market. Instead of buying actual gold, traders buy or sell units for a specific financial instrument based on whether they think the underlying price will rise or fall.

Futures and Options Contracts

Futures contracts enable an investor to ascertain a future price at which the contract will be settled, be it in physical or cash. On the other hand, options contracts give the trader an option to buy or sell a contract at a future date (until expiry), with a minimal option price.

These are good trading options for speculative purposes, which expert traders exploit to hedge their portfolios. Gold trading online reduces exposure to inflation and stock market crashes.

How to benefit when gold prices fluctuate?

Demand for gold is due to its use in several industries such as in the manufacturing of jewellery or in its use in technology and as a financial reserve. Ever since industrialisation and more so with globalisation, the rise in electronics has quadrupled since the 1970s, some other reasons being withdrawal from the Gold Standard and a rise in population.

Although gold is a stable asset, it has historically seen many price fluctuations due to policy changes and the discovery of new mines. One way to potentially generate some revenue through gold in these times is by owning shares of companies involved in the mining and processing of bullion. But this is a very risky endeavour because of prevalent uncertainties.

Another way to benefit from gold trading online can be through investment in sovereign bonds in stable regimes, as these are denoted as legal tender and therefore are highly secure investments. Gold ETFs can be easily traded via popular commodity exchanges such as Chicago Mercantile Exchange, Tokyo Commodity Exchange, etc. The gold price can also fluctuate by trading in gold leveraged forex pairs.

Final Thoughts about Gold trading

It is very important to understand how forex and commodity trading works in general before someone jumps into the arena of gold trading. Although it looks rather daunting but given all the technical strategies and analyses through market research, it can potentially be a good investment. However, traders need to be careful with regards to the timing of entering and exiting trades as well as with deciding the investment term, as this makes all the difference.

Trading gold CFDs with IronFX

Being a leading broker since 2010, IronFX is a trusted broker for trading CFDs on gold. With ample educational and trading material as well as advanced services and conditions, traders can utilise:

• 500+ financial instruments
• Diversification of portfolio
• Risk-free demo account
• Going long or short
• MT4 trading platform

There is also the IronFX Trading School and the trading blog which traders can explore to take their trading to the next level.

DISCLAIMER:

This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.

The post Gold Trading Online: Everything you Need to Know appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.