Spotlight on Gold
Education - Milan Cutkovic | 10 Jul 2019
In this article, we will look at one of the most popular trading instruments worldwide - Gold.
Gold is a precious metal that has been around for a long time and has been primarily used for coinage and jewellery. It is easy to see the important part that Gold used to play in the global economy: It was used as currency during many eras, and the Bretton Woods system which ran from 1944 to 1971 was built around it.
Who is trading it?
Gold is a popular instrument both for short-term speculators and long-term investors.
Investors tend to:
- Buy physical Gold (coins/bars) or invest in Gold ETFs
- Hold it over a long period of time
- Use it as an inflation hedge or portfolio diversification tool
Speculators tend to:
- Trade Futures contracts or CFDs
- Go both long and short
- Hold positions from seconds to months – depending on the profile of the speculator (e.g. an algorithmic fund may keep the position open for seconds, while a macro hedge fund may keep the position open for months)
The major global trading hubs for Gold are London (LME), Chicago (COMEX) and the Shanghai (Shanghai Gold Exchange). London is still by far the biggest trading hub, but recent trends have seen a shift towards East with the Chinese market becoming increasingly important.
What is moving the Gold price?
There are multiple factors that can affect the Gold price, but the following two are amongst the major ones:
* Geopolitical developments - the precious metal is generally seen as a safe haven, and prices tend to rise during times of geopolitical tensions
* Monetary policy - Gold and the US Dollar have an inverse relationship. Therefore, expectations of rising interest rates in the US will boost the Dollar and put Gold under pressure. On the other side, should US rate expectations decrease, the US Dollar may decline while Gold prices rally.
The LBMA Gold Price is the benchmark price for gold delivered in London, and the most popular one of its kind worldwide.
Trading Gold at AxiTrader
AxiTrader offers two Gold products:
- Gold Spot - swaps apply; can be traded 24/5
- Gold Futures CFD - no swaps apply, only rollover of the futures contract; trading hours based on COMEX schedule
Locating the Products:
You may add the Gold symbols in your MetaTrader 4 by holding “Control” (CTRL) and the letter “U” on your keyboard at the same time. This shortcut will lead you to the Symbols menu.
There, you can find the Gold spot products in the “Metals Standard” or “Metals Pro” (depending on the account type that you selected) category. With AxiTrader, you can trade Gold against all major currencies. The Futures CFD for Gold can be found in the category “Commodity Futures”.
The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.
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