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Gold is one of the world’s most traded precious metals.
Did you know that in today’s markets, it’s possible to earn profits from trading commodities without having to physically own the metal? Now, you can trade with gold. Once upon a time, you had to buy and sell the metal itself. That’s all changed.
Gold trading via CFDs is based on opening a temporary order to buy or sell a precise amount of gold. The profit or loss is then determined by the change in trade gold price during the contract duration.
Several factors cause the gold trade market price to move up or down every day.
Market sentiment – Geopolitical instability and tensions are some of the most influential factors that determine the price of gold.
Day traders who hope to profit from changes in the gold price will follow the news for signs of the political, social and economic wellbeing of major economies in the world.
By and large, when there is mass instability, gold prices may generally rise. This is because gold is seen as a “safe haven” that can withstand volatility more than common currencies.
In more stable times, gold prices may drop as the increased risk appetite of investors leads to cash flows away from gold and into more diversified assets.
Currency movements – Since the US dollar is a strong influencer, commodity prices around the world increase when the dollar falls.
Historically, gold has had a strong “inverse” correlation with the price of the US dollar. That means that when the US dollar is strong, gold prices are more likely to fall. While when the US dollar weakens, gold price tends to rise.
Gold is a volatile asset. Differences in trading conditions between various brokers can make a big difference to gold traders.
Spreads: Because of its volatile nature, spreads on gold can go above 100 pips with some brokers. At TIOmarkets, spreads are usually lower than 20 pips on gold.
Execution speeds: Slow order execution speeds can lead to a big difference between the price you see when you click to open a trade, and the actual price your order is opened at. This difference between prices is called “slippage”.
At TIOmarkets, we have some of the fastest execution speeds you can find, resulting in minimal slippage and more orders filled at the price you clicked.
Regulation: Investing in gold and other volatile assets can put your capital at significant risk. You should not trade gold CFDs with any unlicensed or unregulated entity.
TIOmarkets holds licenses from both the Financial Conduct Authority and the Financial Services Authority. Gold traders are protected by some of the strictest financial regulations in the world.
Leverage: High leverage can greatly increase both the risk to your investment and the potential returns.
If you are comfortable with a high level of risk in return for higher potential gains, you may want to seek a leverage ratio that is commensurate to your investment goals.