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Online Gold Trading
UK traders can profit from the price movements of commodities like gold without actually owning any gold. The most popular way to do this is to derivatives trading – CFD trading with gold. Contracts for Difference (CFDs) are essentially temporary orders to buy/sell a pre-stated amount of gold. Profits and losses are determined by changes in the gold price while the contract is active. All gold CFDs have a contract duration.
Here at AvaTrade UK, it is quick and easy to trade gold online. We are regulated to offer real-money gold trading to our UK traders. Among others, you will enjoy these benefits:
- We offer competitive spreads on all gold trading activity
- We offer leverage of to allow for bigger gold trades
- Trade on the powerful Meta Trader 4 platform
- Enjoy full mobile trading functionality with AvaTradeGO around the clock
- Traders can profit on gold price movements on the upside or downside
How to Trade Gold using Technical Analysis
Those who are familiar with technical trading strategies will see how the market conditions have changed in gold prices over the years with a look at a long-term chart. It’s easy to see that from 1999 through 2012 gold prices were in a solid uptrend. Then from 2012 through 2015 we saw a steep correction that turned into a sideways market from 2015 through 2019. Since 2019 the uptrend has resumed. It is always important to know the underlying trend in the market when choosing a trading strategy. When the market is trending strongly, you’ll want to use a momentum-based strategy, but when the market turns sideways a ranging strategy or low volatility strategy is best.
When using technical analysis to trade gold the best way to start is by using simple trendlines and prior highs and lows as levels of resistance and support. These can give you fairly accurate price targets if you understand the underlying trend. To find support levels simply connect the previous lows, while resistance levels are found by connecting the prior highs. And for those familiar with forex patterns like double tops and bottoms or head and shoulders, you’ll find these to be just as accurate in analysing the gold market. More advanced technical traders can also use Fibonacci retracement levels, various oscillators, or other types of analysis to find the best entry and exit points.
Our Gold Trading Techniques
It is also possible to trade gold with fundamental analysis techniques. The most important consideration on any given trading session is whether market sentiment is positive or negative. This can have a strong impact on markets, and even during a strong uptrend a period of negative sentiment can cause a steep drop in price. More advanced gold traders will also look to the U.S. dollar, because gold has a strong negative correlation with the USD. That is, when the USD strengthens gold will often fall, and when the USD weakens gold will often rise. It isn’t 100% accurate, but it needs to be considered because it is a strong correlation.
Another consideration for gold traders is the current demand for jewellery. Because 50% of gold production is consumed by jewellery production it’s a wise idea to keep your finger on the pulse of demand for gold jewellery, particularly in India and China, where gold is still used as a long-term investment for many people. Other “hidden” things that can influence the price of gold include central bank buying and selling, and the small industrial usage of the metal.
Traders also need to keep an eye on the supply side of things by watching production numbers from the major gold mining companies like Newmont Mining and Barrick Gold. And just like any other asset all the money management and risk management rules apply. Always avoid over-leveraging your trades, make sure to set targets for exits, and always set your stops in case something unexpected happens in the market.
The Rich and Fascinating History of Gold Trading
Gold has been mined since prehistoric times. This precious metal was initially found in small pieces known as nuggets at the bottom of rivers. Gold demand increased so sharply that the ancient Egyptians began mining it as far back as 2000 BC. Gold has been used for millennia as a trusted form of money for trading purposes.The gold standard was a monetary system whereby countries would back up their currency with an equivalent amount of gold. The gold was held in the Reserve Bank of each country, since countries accepted gold as an actual currency. The UK left the gold standard at the start of WWI, and soon after, many countries followed suit.
Investors and traders have access to several types of gold trading options, including:
- Gold Coins and Gold Bullion –
Bullion is the term used to describe a group of precious metal. It is measured in bars, and has a specific weight.
- Gold Certificates –
These resemble bank notes, and they began in the 17th century. Gold certificates serve as evidence of gold ownership. These can be transferred much like cash banknotes. Nowadays, there are several banks that issue gold certificates, and they reflect a quota of gold coin or gold bullion.
- Gold Futures –
Gold futures are contracts that indicate how much gold will be delivered in the future at a predetermined price. These gold futures contracts are used by UK and other investors to manage price risks. They are all traded at centralized exchanges, and contracts provide greater flexibility and leverage than trading actual gold by itself.
- Gold ETFs (Exchange Traded Funds) –
Since gold is expected to generate good returns over time, ETFs have been established. These funds are managed by experts in gold trading. They have the potential to offer much better returns on gold investments than a trader could generate on his/her own. The gold price influences the performance of ETFs.
How to trade gold?
- Open a trading account at Avatrade UK
- Fund your account to have a sufficient trading budget
- Choose the desired position size
- Select leverage
- Open a Long (buy) or Short (sell) position according to your analysis
Gold Exchange Info
Gold markets are closely correlated with currency markets, macroeconomic factors, and geopolitical events. Multiple factors come into play when determining the price of gold:
- The MT4 gold symbol is GOLD
- The spread on gold trading is $0.50
- The minimum trade size for gold is 1
- Gold is traded on the Nymex exchange
- Gold trades between 11 PM and 9:59 PM
- The margin requirement for gold is 0.50
- Gold can be traded in increments of 0.01
Ways to trade gold at AvaTrade?
For an investment of just , UK traders can begin trading gold and other precious metals online. AvaTrade is a trusted and licensed UK brokerage, with an exceptional reputation. We have been operational for 11 years, and our gold trading experts are standing by to assist you every step of the way.
Among others, you will be able to access a wide range of trading educational tools and resources, and enjoy full use of all trading benefits exclusive to AvaTrade.
A wide range of trading solutions is available, including multiple top trading platforms and free automated trading solutions to meet your trading needs. UK traders are assured of the perfect match between their skills and trading style, and the gold markets.
Trading Gold is a Breeze
AvaTrade makes it easy for you to trade gold online. If you have knowledge of Forex trading, you will have no problem trading gold. The unit of measurement for gold is troy ounces, and this is how gold is quoted against currencies. Since gold is a dollar-denominated asset, it is quoted against the USD. This is similar to how currency exchange rates are presented.
What Influences Gold Trading Strategies?
There are many factors impacting the price of gold, demand for gold, and the gold market. These include the following:
- Currency Fluctuations –
the USD, or US dollar, is an important determinant of the price of gold. When the USD is strong, demand for gold decreases. When the USD is weak, demand for gold increases. There is an inverse relationship between the USD and gold.
- Supply and Demand Factors –
Jewellery manufacturing and production constitutes 50% of global demand in gold. Investment accounts for an additional 40%. When demand increases, and supply is low, the price rises. However, if supply increases and demand is low, the price will drop.
- Market Volatility –
market movements have a strong effect on the price of gold. Since gold is regarded as a safe-haven asset, when stock trading markets are performing poorly, investors flock to gold. The opposite is also true.
- Geopolitical Uncertainty –
any instability in the financial markets, or in the political arena can cause traders to rush to gold. This will drive up prices.
Gold is considered a safe-haven asset for investors. It is always advisable to include gold in your financial portfolio, as a means of hedging against uncertainty in other areas. There is an inherent degree of risk when trading gold, and UK traders should be aware of this.
Why is Gold a Safe Haven Asset?
A safe haven asset protects investors during times of market turmoil or extreme volatility. At the very least, safe-haven assets ensure capital preservation during uncertain times. Gold has for a long time proven its safe-haven credentials, maintaining or increasing its value during times of turmoil when practically all other assets decline in value.
A major reason for this is that gold has held its aesthetic value since ancient times. Its physical characteristics have always amazed man – it is malleable, practically indestructible, and very rare. Gold also has a limited supply, unlike fiat currencies which can easily be printed by underlying governments or central banks. There’s only a finite amount of gold that will ever be mined, and even when new deposits are discovered, it takes a few years from exploration to eventual production.
As a safe-haven asset, gold protects investors during times of crisis and not necessarily during times of normalcy when investors are high on confidence. Even so, it is important to understand how to trade gold when there is market instability. It has been observed that gold works as a safe haven asset for a limited time during crisis times until investor confidence starts to return or volatility starts to decline. This means that investors can buy gold in crisis periods when there is extreme volatility and then sell it a few days later when volatility returns to normal. In this way, investors can, at the very least, protect their capital from extreme market fluctuations; but they can also earn returns during a market downturn. This also means that gold can act as a portfolio diversifier- ensuring that the overall risk of a portfolio is reduced without limiting the potential returns.
Gold Trading Tips?
- Gold is quoted as XAU against the USD. XAU is the ticker code for gold.
- Price is an important determinant of gold demand. This is especially true with commodities like gold, which are sensitive to price fluctuations.
- Currencies like the Japanese Yen (JPY) and gold are comparable. Both the regarded as safe-haven assets when markets are volatile, or unstable. Therefore, both gold and the JPY often move in tandem with one another.
Gold Trading Main FAQs
- Is it still worth it to trade gold?
Gold has been used as a medium of trade and a store of value for thousands of years, and trading gold in the 21st century is just as relevant as it’s always been. Gold remains a valuable store of value, with many investors using it as a hedge against financial crisis, inflation, and geopolitical risks. As one of the largest and most liquid markets in the world, the gold market offers traders huge opportunities. Prices can be volatile, but the market is rational, which makes trading gold an exciting and potentially profitable endeavor.
- Is gold the best precious metal to trade?
Gold is definitely the most popular metal for both investors and traders, but if you’re looking for a precious metal with a bit more “pop” then silver is also a very good choice. That said, gold is often easier to forecast since it is primarily used as a safe haven asset and a store of value. Unlike silver and the other precious metals gold does not have any large industrial use, so it has fewer factors impacting its movement. Plus the huge liquidity makes the market accessible.
- What is the best strategy for trading gold?
To trade gold successfully there are many strategies that can work. Of course if you can follow the professionals, the so called “smart money”, you’re likely to have a better chance of success. One method they use is to focus on the seasonality of gold. Historically gold makes it strongest moves in September. It is also strong in the first two months of the year. So these are the best months to look for a long setup. Conversely gold is weakest in March and October, making these good months to look for pullbacks in the market.
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