For many years, gold has been regarded as a trustworthy and highly liquid asset worldwide, and we are not talking about gold digging here. It is worth noting that its reserves in the world are limited, and mining requires considerable financial costs. Therefore, according to analysts’ forecasts, the value of gold will only increase shortly. As a result, gold trading is considered a stable and reliable option.
If you arrange to invest in gold, it is an absolute must to make up your decision on your trading method. Depending upon the circumstances of your financial life, the most widespread gold trading discretions are opening impersonal (metal) accounts, buying gold bullion from a bank, trading gold on financial markets such as Forex with the help of a broker, putting cash in gold coins, investing gold mining enterprising, and plowing money into in the jewelry business. To select a suitable trading method, it is worth getting familiarized with the pros and cons of each of them.
Investing in Gold: Is It Worth it?
The main perks of gold as an investment:
- Protection against inflation. Over several years, gold will boost in price, giving the investor a tangible income.
- Diversification of the investment portfolio. Precious metals are weakly correlated with other assets, hence, they help reduce financial risks and losses.
- Reliability. Unlike shares and securities, which can immediately turn into “fantasy”, gold cannot depreciate to zero.
- High liquidity. Gold is easy to buy and sell practically in every corner of the globe.
Factors Affecting the Gold Rate
Generally speaking, the price of gold is affected by many fundamental and speculative factors. The key ones are:
- Monetary policy of central banks, especially the US ones. In this case, low interest rates and “soft” money usually support the value of gold.
- World market economy. During periods of recession and uncertainty, the demand for gold increases.
- Geopolitics. Conflicts, wars, and instability in key regions of the world provoke a rise in prices for this precious metal.
- Dollar exchange rate. Gold has an inverse correlation to that country’s currency.
- Dynamics of stock markets. Investors switch to gold when equity markets begin a correction or collapse.
- Physical demand for metal from jewelers, industry, and Central Banks.
- Increased demand against the backdrop of speculative expectations.
Gold vs Currency
Golden cash has a price, and that rate fluctuates depending on the quotes of other currencies, including the US dollar, the euro, and the Japanese yen. The yellow metal can be bought and stored, and although it is not often used in everyday calculations, it is highly liquid, and easily converted into cash in any currency.
In addition, gold has all the qualities that distinguish all international currencies. Sometimes gold is quoted higher than monetary currencies, and sometimes cash overtakes gold in value. The popularity of gold increases when investors are not sure about “paper” instruments.
When it comes to gold trading, price dynamics are influenced by a variety of factors, comprising trading psychology, as well as technical and fundamental analysis. Although there is a great amount of approaches a comprehensive strategy that combines these three forms of analysis can provide additional benefits.
Trade Gold: Perks and Peculiarities
If you are interested in buying gild, then wait for the price to drop to a minimum – you will see this on the XAU/USD chart. Gold is usually bought to balance the effects of inflation on foreign currency buyers. The goal of such a deal is not a long-term perspective, but prompt results. This tool is used to implement other, more profitable investments and procedures.
How to trade CFD (GOLD) XAU/USD
The algorithm of gold trading is straightforward:
- Choose a broker, start an account, and pass the verification process.
- Replenish the deposit with a minimum amount.
- Familiarize yourself with the trading conditions for the XAU/USD pair: check the available leverage level as well as minimum transaction volume.
- Conduct a short analysis and start earning cash.
Gold and silver trading can be valuable resources in Forex trading. For instance, a standard lot size for gold is 100 troy ounces, and a standard lot size for silver is 5,000 ounces. Also, as in the case of currencies, it is possible to open positions in the size of 0.1 and even 0.01 of a standard lot.
Conclusions
The traders can extract income practically instantly at the smallest price movement. It can create peace of mind knowing your investment strategy is being put to good use. For example, according to the strategy of the Golden Bow, which is specially designed to trade gold on Forex. Active strategy is quite chaotic, but it is suitable for beginners who have not developed the skill of technical analysis. The coupling strategy is based on the direct relationship between the gold/dollar pair, XAU/USD, and the currency pairs, AUD/USD and EUR/USD, and the reciprocal relationship with the USD/CHF pair. With JM gold trading, it is possible to realize your best trading potential while dealing with gold as a trading tool.
