Gold Price & Gold Trading
Welcome to our guide on trading gold online. In this article, we’ll cover:
1. Factors affecting gold prices (XAUUSD)
2. Gold trading hours
3. Strategies for investing in or trading gold
4. Answers to common questions from beginners
Factors Affecting Gold Prices
Before diving into trading strategies, it's essential to understand what influences gold prices. The price of gold is primarily determined by supply and demand dynamics, economic indicators, and geopolitical events. Unlike volatile investment trends, gold retains intrinsic value, making it a fundamental component of many investors' portfolios.
Gold Market Trading Hours
A common question among new investors is, “What time does the gold market open?”
Trading Accessibility
Gold markets are open 24 hours a day, five days a week. Unlike stocks, gold is not traded on a central exchange, which allows for continuous trading.
Market Overview
The largest gold markets include the futures markets and physical bullion markets, accessible through brokers for futures trading.
Optimal Trading Times
While you can trade gold at any time, some of the best trading hours are during the European and American sessions, which tend to be the busiest. In contrast, the Asian session is typically quieter, offering fewer trading opportunities.
By trading gold during peak market hours, you maximize your chances of finding profitable opportunities.
Should You Trade Gold? Is Gold Trading Still Profitable?
Current Investment Viability
Yes, gold remains a solid investment choice. Its intrinsic value and historical role as a safe-haven asset allow it to retain value, especially during inflationary periods. Although prices may not have surged significantly in recent years, gold continues to be an essential part of investment strategies.
Investment Goals
If you’re considering buying gold now, the decision hinges on your investment objectives. For long-term holders, average gains can be expected. In contrast, swing traders aiming for short-term price movements may see higher returns, albeit with increased risk.
Safety of Investment
Many beginners wonder if gold is a safe investment. The answer is yes. Gold is one of the safest investments available due to its physical nature. While it can experience significant price fluctuations, effective management of these swings can lead to above-average returns.
While predicting the future with precision is challenging, gold has served as a reliable store of value for thousands of years. Given its enduring value, it is likely to remain a valuable asset in the future.
Factors Affecting the Price of Gold
As you begin trading gold, you might wonder how its price is determined. Several key factors influence gold prices:
Supply and Demand
The primary driver of gold pricing is the balance between supply and demand. High demand combined with low supply typically leads to rising gold prices, while high supply and low demand generally result in price declines.
Physical Uses
Gold is a tangible commodity with various applications, including jewelry manufacturing, electronics, and as a form of currency. These uses contribute to its overall demand.
Inflation
Inflation is a critical factor affecting gold prices. Historically, gold prices tend to rise in line with inflation as investors turn to gold as a hedge against the devaluation of fiat currencies.
Geopolitical Stability
Political instability can trigger a spike in gold prices. For instance, the trade tensions between the United States and China significantly boosted gold prices throughout 2019 and into 2020.
Central Bank Reserves
The accumulation of gold reserves by central banks worldwide also influences prices. Central banks often stockpile gold as a hedge against inflation and to stabilize their currencies. In 2020 alone, central banks purchased approximately 650 tons of gold.
Long-Term Trends
Over the years, gold has generally appreciated in value, currently trading above $1,700 compared to about $100 fifty years ago.
Economic Stability
Interestingly, gold prices tend to fall during periods of economic and political stability, as the need for gold as an inflation hedge diminishes in such environments.
The Impact of the US Dollar
The US dollar significantly influences gold prices, as both are considered safe-haven assets that compete for investment capital. Here’s how the two interact:
Falling Dollar
When the US dollar weakens, investors often flock to gold to preserve the value of their investments, leading to rising gold prices. A declining dollar typically coincides with rising inflation.
Strong Dollar
Conversely, if the US dollar strengthens, investors are likely to favor it over gold, resulting in falling gold prices.
In summary, gold and the US dollar have an inverse relationship; when one rises, the other tends to fall.
Trading Gold CFDs vs. Investing in Physical Gold
Which One is Right for You?
As a beginner in trading, you might be curious about how to engage with gold, especially given its reputation as a safe-haven asset. While you can trade or invest in gold through various methods, the most common approach today is not through physical gold but rather through online trading instruments.
Why Consider Online Instruments?
Buying and holding physical gold can be cumbersome. It requires secure storage, making you vulnerable to theft or loss. For most investors, the best way to trade and invest in gold is through online products such as gold Contracts for Difference (CFDs), stocks, and Exchange-Traded Funds (ETFs).
What is a Gold CFD?
A gold CFD is a financial instrument offered by many Forex and CFD brokers that tracks the price of gold. This allows you to trade gold without the need to own the physical metal. Instead of buying an ounce of gold, which is priced over $1,700, you can invest smaller amounts and profit from the fluctuations in gold prices. Additionally, you can take advantage of falling gold prices without needing to deposit large amounts of capital.
Understanding Paper Gold
You may have heard the term "paper gold." This refers to various digital representations of gold, such as gold CFDs and gold futures, which are traded by millions of investors globally. However, gold stocks do not fall under this category as they represent shares in gold mining companies rather than actual gold.
How to Trade Gold CFDs
To start trading gold CFDs, open an account with a regulated broker that offers these instruments. Look for a broker licensed by a tier-1 regulator, such as the UK's Financial Conduct Authority (FCA). Your chosen broker should provide:
Competitive spreads
Fast execution speeds
24/5 customer support
Some Forex brokers also offer gold stock CFDs, allowing you to bet on the performance of gold mining companies, giving you the flexibility to trade with lower costs compared to traditional stockbrokers.
Differences Between Trading Gold CFDs and Physical Gold
Aspect
Trading Gold CFDs
Trading Physical Gold
Liquidity
Can be bought and sold quickly without storage needs.
Requires physical storage, which poses security risks.
Quantity
Can be traded in small quantities.
Must be purchased in the form of bars or jewelry.
Profit Potential
Profits can be made from both rising and falling prices.
Profits can only be realized from rising prices.
Step-by-Step: How to Trade Gold Online
Many beginners often find it challenging to figure out how to buy and sell gold commodities online. This guide will walk you through the process of trading gold on the popular MetaTrader 4 platform and provide tips for becoming a successful gold trader.
Understanding Gold Trading Symbols
Before you start trading, it's essential to know that gold is typically listed under the ticker symbol XAUUSD, which represents the price of gold quoted in US dollars. Here:
stands for gold, derived from its chemical symbol Au.
refers to the US dollar.
To trade gold CFDs online, you need to open a trading account with a reputable CFD broker. Here’s how to do it:
1. Choose a Broker
Select a reliable CFD broker, like WisunoFX.
2. Open an Account
Complete the application form to set up your live trading account.
3. Verification
Once your identity is verified, your account will be activated.
Trading Gold on MetaTrader 4
1. Access Your Account
Log into the MetaTrader 4 application.
2. Select Gold
Click on the buy or sell buttons for gold CFDs.
3. Choose Amount
Specify the amount of gold you wish to trade.
4. Open Position
After placing your order, set a protective stop-loss and a take-profit order to manage the trade effectively.
By trading with WisunoFX, you can capitalize on both rising and falling gold prices without significant margin requirements.
Liquidity and Volatility
The gold market offers deep liquidity and high volatility, providing numerous trading opportunities.
24/5 Market Access
The precious metals market is open 24 hours a day, five days a week.
Trade Anywhere
Use MetaTrader 4 on mobile and tablet devices to trade from anywhere.
No Commission
Enjoy tight spreads with no commission on gold trades, maximizing your profits.
Gold Trading Strategy for Beginners and Advanced Traders
While there is no foolproof strategy that guarantees zero losses, here are some essential strategies to help you trade gold effectively:
Always Trade With the Trend
Trading with the trend usually presents the best opportunities, as markets tend to trend for extended periods.
Time Frame Selection
Choose a trading timeframe that suits your schedule. If you have limited time, consider trading on the 4-hour and daily charts.
Identify Support and Resistance Levels
Look for potential trade areas such as support and resistance zones. Bullish trades can be made when prices bounce off support, while bearish trades can be executed off resistance.
Additional Tips for Successful Gold Trading
Stay Informed
Keep track of global political events and market trends, as they can significantly affect gold prices.
Embrace Losing Trades
Understand that every trading strategy will have losing trades; don’t be discouraged.
Utilize Resources
Take advantage of daily gold trading tips and strategies from your broker, such as WisunoFX, and consider using add-ons like Trading Central and Autochartist for enhanced insights.
Backtest Your Strategy
Ensure your chosen strategy has performed well in the past to increase its chances of success in the future.
Work on Your Mindset
A solid trading mindset is crucial. Focus on holding onto winning trades while cutting losing trades short.
Register for an Account
Complete the live trading account application form.After identity verification, your account will be set up.
Fund Your Account
Deposit funds to start trading.
Start Trading
Trade on various devices, including PC, Android, iPad, and iPhone, or via a web browser.
FREQUENTLY ASKED QUESTIONS
Yes, gold remains a relevant investment today. It continues to act as a safe-haven asset, providing security during economic uncertainty.
Yes, gold trades 24 hours a day, five days a week. However, gold futures markets are closed over the weekend, so you cannot open new trades during that time, but you can hold existing positions.
You don’t need a large amount of money to start trading gold. Most brokers allow you to open an account with as little as $50, but a recommended amount to trade gold effectively is around $2000, given its relatively high value.
The best way to invest in gold is through gold CFDs (Contracts for Difference). This method allows you to trade with a small account and profit from both rising and falling gold prices.
Yes, beginners can successfully trade gold by following the strategies outlined on this page and throughout our website.
You can invest in both gold and silver. Gold is generally more valuable and volatile, offering more trading opportunities. Silver is a cheaper and less volatile asset, making it suitable for different investment strategies.
There isn’t a single "best" MT4 indicator for gold trading, but popular choices include the Fibonacci retracement tool and moving average indicators.
The best way to practice is by opening a demo account, which allows you to trade gold without risking real money. Documenting your trades can help you identify areas for improvement.
You can open a live account here.
