Gold in the European Market

 Gold Trading and Investing Guide

 

Gold Trading and Investing Guide Due to its value and rich history, gold has always been valued around the world. Compared to coins or other types of assets, gold retains its value over the years and people use it to pass wealth from generation to generation.

• Gold price historically
• Gold trading methods
• How to trade gold online
• What are the best times to trade gold?

Gold price historically

The year 1792 is marked as one of the most important years for the currency backing gold and silver, since the United States of America established the dollar as its standard.

Just under two centuries later, in 1971, President Richard Nixon withdrew the United States from the gold standard , an economic change that had a significant impact on the price of gold around the world. On January 21, 1980, gold prices rose from $35 per ounce to $850 per ounce (and $1,995.21 today).

The price then declined for 20 years, reaching US$377.18 in 2001, before rising for the next decade until it peaked at US$2,075.08 in 2020.

You can check here today's gold price

The “precious metal” tends to appeal to most people during times of economic uncertainty when online gold trading increases.

In fact, during these times of economic turmoil, the price of gold tends to rise as investors flock to the safe haven more.

Gold's status as a safe-haven asset class dates back to the Bretton Woods Agreement of 1944. Because the US Federal Reserve had to hold gold that was worth 40% of the value of the US dollar, the bank accumulated about 75% of the world's gold. For this reason, the majority of developed countries agreed to reform their currencies against the US dollar, and this is why the dollar is the world's global currency.

According to the World Gold Council, the United States still has the highest official amount of gold in the world at 8,133.5 tons, followed by Germany, Italy, France, Russia, China, Switzerland, Japan, the Netherlands, and India

Gold in the European Market

 

Gold trading methods

Of all precious metals , the most common option is to invest in the safe haven gold, and it is generally purchased as a way to diversify risk, particularly through the use of futures and derivatives contracts.

Like other markets, the price of gold is subject to fluctuations. The price of gold is affected by supply and demand, but unlike most raw materials, saving has a greater impact on its price than on its consumption.

Taking into account the huge amount of gold stored on Earth, compared to annual production, gold prices depend largely on changes in sentiment (demand), and not on changes in annual production (supply).

According to data from the World Gold Council, in recent years, the annual gold production of mines has been approximately 2,500 tons. Of this amount, 2,000 tons are used in jewelry or industrial/dental production, while the rest goes to retail investors and ETFs.

There are a variety of ways to trade and invest gold. Here are a few of them:

1. Classic investment in gold bullion or coins
This includes the actual purchase of gold such as gold bullion, gold coins, or even jewelry. Traders will need to find other individuals willing to sell their pure gold, get the money in exchange to buy its full value, and store it in a safe place in the hope that its value will rise.

2. Trade gold futures
A futures contract is an agreement between two parties to buy and deliver a commodity, such as gold, at a specific time in the future. In fact, the first futures contract was written in 1851 for the commodity corn and was offered through the Chicago Stock Exchange of Trade (CBOT).

Gold is traded at a volume of 100 ounces per contract, and with every 1 pip it moves that equates to $100. This means that simply buying gold futures contracts (the lowest you can on the stock exchange is one contract) and ten dollars move in the opposite direction to you, this will be equivalent to a loss of $1,000, and vice versa, if the gold moves in the same direction, you will gain $1,000.

Advantages and disadvantages
With gold futures, you can trade gold almost 24 hours a day (during the trading week), while you may also be able to trade with higher leverage.
Futures contracts expire on certain dates which can be difficult if a trader wants to hold a long-term position.
Trading futures also requires a large amount of capital as contract sizes tend to be very large.

 

Unveiling the Elegance of White Gold  

3. Trade gold via CFDs

As we mentioned before, CFDs , or CFDs, are another way to trade gold. Through CFDs, traders have the ability to trade gold contracts up and down without owning the actual gold.

Advantages and disadvantages

Use of financial leverage . Traders can use margin trading to control a large trade with a small deposit.
Trade in any direction: buy or sell, and potentially benefit from both bull and bear markets.
You can hold trades for as long as you want: with CFDs, you can trade in and out of the markets within seconds, or you can choose to hold trades for several days, weeks or months.
However, it should be noted that CFDs are subject to a swap fee, which is the interest charged on a trade held overnight.

4. Trade gold on binary options

When you purchase a gold options trading contract , it gives the buyer the right but not the obligation to buy or sell the underlying asset at a specific price before or on a specific date in the future.

However, gold options trading contracts expire and their value changes according to the volatility of the asset's price and how close it is to expiration. In essence, the value of gold options contracts decreases over time due to “time ebb”.

When trying to trade gold options, users must have at least $2,000 in their accounts, and a minimum of $25,000 if they want to trade gold on a daily basis on binary options, which is a very large amount for many traders.

5. Gold stocks

The most common form of trading gold online is to do so indirectly by purchasing gold stocks or in other words Gold – shares of gold mining companies.

Trading gold online in this way means you don't have to worry about storing the physical commodity on your property or anywhere else. However, keep in mind that each method has its advantages and disadvantages.

Advantages and disadvantages

1. When the price of gold rises, companies involved in gold trading naturally benefit from increased sales, which means that the value of their shares tends to correlate positively with gold prices.
2. The downside to buying gold mining stocks is that not all of them are able to outperform or even match the price of the precious metal.

The Elegance Handmade Gold Industries 

 

 

6. Gold ETFs

Gold ETFs are another way to indirectly invest in gold.

An ETF is an exchange-listed fund designed to track the price movement of an asset, index, or basket of stocks.

Each ETF varies in how it tracks the value of that asset; They may invest heavily in physical assets, own shares in industry-related companies, financial derivatives such as futures and options, or some combination of these.

Advantages and disadvantages

• One advantage of investing in gold ETFs is that they can provide diversification to your portfolio across a number of different instruments.
• In addition, it is possible to purchase precious metals ETFs that allow investing not only in gold, but also other precious metals such as silver.
• However, it should be noted that buying and selling ETFs will likely incur a commission, while owning one will incur a small management fee.
• Some gold ETFs suffer from a lack of liquidity, which affects the ability to buy and sell them.
  
  
  

How to trade gold online

If you want to know how to trade gold online , or how to invest in gold , the first step is to make sure you have the right tools and products to do so:

1. Use the right medium

For most people, purchasing gold bars or coins and storing them under the bed is not practical or safe. However, there are other ways that enable you to benefit from the movement of the price of gold. One way is through the use of a product called contracts for difference, or CFDs.

CFDs allow traders to speculate on the price of gold and potentially profit from rising or falling prices. By trading CFDs, the trader does not own any physical gold which means he will not face storage or security issues. With Admirals, users can speculate on the price of gold through a broker that offers the highest levels of licensing, security and integrity, as well as the ability to:

Trading and investing with a broker regulated by the Jordanian Securities Commission, the Financial Conduct Authority in the United Kingdom, the Estonian Financial Supervision Authority, and the Cyprus Securities and Exchange Commission.

Open multiple types of accounts, such as a Contracts for Difference (CFD) trading account, in order to buy and sell and potentially profit from rising and falling markets, as well as accessing leverage of up to 1:500. This means that you can control a large trade with a relatively small deposit.

Access the world's fastest and most secure gold trading platform , MetaTrader , for Web, Windows, Mac, iOS and Android so you can trade on the go.
Trade on multiple asset classes such as gold , indices , commodities , currencies , global stocks and more.

To start trading gold today, simply click on the banner below and you can start trading gold CFDs commission-free and access all the above features

What are the best times to trade gold? 

When choosing the best gold trading hours , traders try to find the times when the gold trading price is most likely to move in a directional manner. This largely depends on the demand for gold at a specific time. We will explore the factors that affect the demand for gold later in the article.

However, you may be interested to know that using the Admirals trading platform, you can trade gold almost 24 hours a day, from 01:00 to 23:59 (Saudi time) from Monday to Friday. Typically, the gold trading hours that provide the most movement can be found in the US trading session, which ranges from 16:30 to 23:00 (Saudi Arabia time) from Monday to Friday.

Final Thoughts:

Gold can serve as a hedge against inflation and economic uncertainty, but like any investment, it carries risks. Research thoroughly, understand your objectives, and consider seeking advice from financial experts before making significant investment decisions.

World Gold