In addition to currency pairs, another instrument is presented on the Forex market – gold. Since 2011, it has lost its “safe haven” status used to protect investors’ savings from inflation. Today the asset is characterized by high volatility, therefore it is of interest for speculative trading.
Specificity of gold as a trading asset
The main specificity of how to trade gold online on an international scale is whether the subject of the transaction is the delivery of real metal or not. In turn, gold futures are deliverable and settlement:
- Deliverable futures provide for a real delivery of gold in the event the buyer expires.
- Settlement – without delivery of the underlying asset, settlements in cash at expiration.
Features of trading gold in Forex
When trading in Forex, delivery of a real contract is not provided, as in the situation with deliverable futures. Trading takes place in CFD contracts, which were invented by British investors.
Formally, these types of contracts do not belong to securities and do not fall under rather complex regulation on the part of national commissions. As a result, in Forex there are lower requirements for the size of a trading account, plus the possibility of using leverage. A CFD is a tool for speculating based on the price movement of the underlying asset.
What are the best tips for trading gold online?
Buying from trusted sellers is perhaps the most important aspect because there is a lot of scams happening on the internet. Blocking the price at or below the current market value is another factor that investors are actively looking for, and reputable dealers usually set the market value plus a small percentage. Another aspect of online gold trading is diversification into various commodities such as futures or bullion in order to balance the portfolio.
One of the first tips to apply to online gold trading is finding the right price, especially when investing in precious metals. Trading gold online is facilitated by online gold exchanges where the metal is bought and sold directly without contacting the buyer or seller. After identifying an attractive offer, a trader usually only needs to check the current rate and then make an investment from the comfort of his home.
Many traders with experience investing in commodities or regularly trading online can vouch for spot gold trading as a vehicle for investment. This form of online gold trading can take place in the absence of sufficient capital because the trader can use the high leverage option offered by the broker. Spot gold trading in the market is at its peak during an uptrend when traders quickly buy contracts only to sell them at a profit when the price of gold falls. It is considered to be a good way to make less profit, similar to intraday trading in stocks, but also has a significant amount of associated risks.