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How to trade gold: gold trading tips for beginners in 2024
In this guide
- 1. How to trade gold: gold trading tips for beginners in 2024
- 2. Can I trade gold?
- 3. Where can I trade gold online?
- 4. What is gold trading?
- 5. What gold markets can I trade?
- 6. Ways to trade gold
- 7. How to trade gold
- 8. What moves the gold price?
- 9. What to consider when you trade gold
- 10. Is gold a good market to trade?
- 11. Gold trading strategies
- 12. Bottom line
- 13. FAQs
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. 4.5/5CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
This page explains how to trade gold online in 2024. Learn about the different ways you can trade gold, what moves its price, and why it might be a good addition to your portfolio.
Can I trade gold?
Copy link to sectionYes, trading gold is straightforward and available to anyone using an online trading platform. gold is one of the most popular commodities for trading and can be accessed through various derivatives.
You can trade gold through many different avenues, including spot gold, futures contracts, gold options, gold exchange traded funds, or CFDs. To decide on the best approach, you will need to consider your goals and time horizon before aligning your strategy with your specific objectives.
Where can I trade gold online?
Copy link to sectionBefore you get started with gold trading you’ll need to register with an online broker. Our experts have selected some of the top gold trading platforms and you can click any of the links below to get started in just a few minutes.
Plus500
CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
What is gold trading?
Copy link to sectionTrading gold is the process of speculating on its price. The price of gold is constantly fluctuating and traders look to capitalise on these movements through buying and selling. Gold trading can be accomplished using various forms including futures and options, although the most practical ways to trade gold include CFD, spot, and ETFs.
What gold markets can I trade?
Copy link to sectionThere are two main ways you can trade gold which include physical trading and derivatives trading.
- Physical gold trading. As its name suggests, physical gold trading involves directly buying and selling physical gold like coins or bars. Trading physical gold means you’ll own the metal itself, but comes with storage and security costs. Physical gold trading is not really practical for the everyday trader.
- Derivatives market. Here, you can trade contacts that represent gold, rather than the metal itself. Some examples include futures contracts, and options contracts. You can also trade gold CFDs or trade the spot gold market. This allows for speculation without needing to store physical gold.
Ways to trade gold
Copy link to sectionThere are several options available when it comes to trading gold and the one you should pick depends on your budget, experience, and the timeframe for seeing returns. Here’s a look at the various ways you can trade gold online.
- Trade gold CFDs. Contracts for Difference (CFDs) are a popular way to speculate on gold price movements without having to own the physical asset itself. This makes them ideal for commodity trading, where it’s not practical to own and store large quantities of gold. With CFDs, you can profit from both rising and falling prices. CFDs also offer leverage, which can amplify your exposure to gold markets.
- Gold spread betting. Spread betting is a trading method allowing you to speculate on the price movements of gold without owning the physical commodity. With spread betting, traders can take positions on whether the price of gold will rise or fall. You can use leverage when spread betting gold. All profits are also tax-free.
- Trade gold futures. Futures contracts are the most common way to speculate on short term price changes. They are an agreement to make a trade at a future date for a pre-agreed price. gold futures contracts require a detailed understanding of what impacts short term prices, and are most suited to someone with experience in the market.
- Trade gold options. Options let you buy or sell gold contracts at a predetermined price on or before a specific future date. gold options trading requires some expertise but allows traders to capitalise on price changes and manage risk, which makes it popular with people familiar with the gold market.
Should I trade spot gold or gold futures?
Copy link to sectionGold spot and gold futures offer opportunities for profits but are suitable for different types of traders. The spot market is best suited for traders looking to capitalise on short term moves. The spot market gives you direct exposure to the current price of gold. It has high liquidity which means you can quickly enter and exit trades.
Gold futures offer leverage and only require you to post margin, rather than the full value. What this means is you can take larger trades without need to deposit large sums of money into your trading account. However, leverage also compounds losses, which brings in more risk. You also require advanced knowledge and expertise.
How to trade gold
Copy link to sectionTrading gold is a simple process. Before you begin, you’ll need to register with a trusted online broker to access the gold market. Follow the steps below to learn how to trade gold.
Step 1. Open a gold trading account
Copy link to sectionChoose an online broker that offers the gold market. We recommend Plus500 as the best gold trading platform. It has one of the widest selections of derivatives available, so you’ll find multiple ways to trade gold.
Step 2. Choose your gold trading method
Copy link to sectionYou can trade gold in many ways. Use our guide above to help you decide which option is most suitable for you. Most traders will use either the gold spot market, gold CFDs, or gold futures.
Once you’ve selected, search for your chosen gold trading method using your broker’s search feature.
Step 3. Analyse the gold market
Copy link to sectionBefore you start trading, take the time to analyse the gold market thoroughly. You can look at factors such as supply and demand dynamics, price charts, and technical analysis or fundamental analysis. You can use your analysis to help develop a trading strategy.
Step 4. Make your trade
Copy link to sectionIt’s time to place your trade when you’ve completed your research and defined your strategy. Search for the market you want to invest in and visit its trading page while logged into your brokerage account.
Check its price and enter your trade details. Consider including a stop loss and take profit level to help protect your position. Once you’ve entered your order details, hit the buy or sell button.
Step 5. Monitor your trades
Copy link to sectionRegularly review your trading portfolio and its performance. You may want to consider rebalancing if necessary and be prepared to adjust your strategy as the gold market conditions change.
What moves the gold price?
Copy link to sectionNot all commodities move in the same way and gold has several unique features that make it independent. Below are some of the key factors at play.
- Supply and demand. Multiple factors can affect gold supply, including labour stoppages and mining discoveries. On the demand side, gold is often used as a hedge against economic and stock market downturns, so when a recession or bear market kicks in, gold prices often go up. The balance of supply and demand is the most common cause of a commodity’s price movement.
- Market sentiment. Whatever the fundamentals of the market might be, investor optimism and pessimism can sometimes play an even bigger part in determining the price of a commodity. All things being equal, it’s best to jump into gold when investor sentiment is positive, or else you might end up suffering stiff losses right off the bat.
- Market volatility. Even when gold is trending upwards, periods of volatility can leave traders shaken up. Make sure you stick to a sound trading plan and don’t overreact to big swings in gold prices.
- Central bank reserves. You can normally expect gold prices to rise when central banks decide to stockpile lots of gold.
- Worldwide jewellery and industrial demand. Both jewellery and industrial uses demand ample supplies of gold. Watch to see if that demand rises or falls, as this can affect the price of gold.
- Value of the U.S. dollar. The price of gold is pegged to the U.S. dollar. So if the dollar goes down in value, gold prices go up, because more gold can be purchased when the dollar is weaker.
What to consider when you trade gold
Copy link to sectionWhen you begin trading gold, it’s important to approach with a well thought out strategy. Considering a range of factors before trading can save you time and money in the long run. Use the helpful tips below to plan your gold trading strategy.
What are your trading goals?
Copy link to sectionBefore you start, you should clearly define your trading objectives. Are you seeking quick gains, or will you be focused on a longer time frame using swing trading strategies? Knowing your goals before you start can help guide you in your strategy and also which gold market to use.
Does gold suit your risk tolerance?
Copy link to sectionMake sure you’re comfortable with the potential for market fluctuations. If you’re a short term trader, then ensure you’ve checked the historical price chart for gold to determine if it’s volatile enough for day trading.
Will trading gold add diversification to your portfolio?
Copy link to sectionMany traders focus on more than one market at a time and diversification is one of the core principles to follow. When you trade gold, make sure it complements the other markets you trade. For example, if you already trade several similar commodities, you may be better off choosing another commodity market to spread your risk.
Take the time to study the gold market dynamics.
Copy link to sectionLike many commodities, gold has unique characteristics and supply and demand fundamentals. To trade gold, studying the broader gold market, especially historical price trends is essential. Before trading gold, you will need to understand the factors that influence its value.
Choose the right trading method.
Copy link to sectionWe’ve already discussed the options available to you to trade gold. Each has its own advantages, so you should select the one most suited to your trading goals. For example, trading gold is best done via futures, options, CFDs, and spot. You could also trade gold exchange traded funds (ETFs).
Is gold a good market to trade?
Copy link to sectionYes, gold is one of the best commodity markets to trade thanks to several reasons. Gold is the largest of all precious metals and has the highest liquidity. This means it’s easy to enter and exit the market, which is an important factor for short term traders. Volatility is also high at times, providing ample opportunities for profits.
Besides it size and volatility, there are various ways you can trade gold including CFDs, futures, ETFs, and even stocks. This makes gold easily accessible on almost all online commodity trading platforms.
What are the risks of trading gold?
Copy link to sectionTrading gold has the potential for significant rewards but also carries risks you need to be aware of. These risks are the same across the overall commodity market, but for gold, several more specific ones apply. Below, we’ve explained the main risks of gold trading.
- Volatility. The gold market is known for its price volatility. Compared to other markets, the price of gold can widely fluctuate daily. It can be costly if you’re unprepared for the volatile nature of the gold market.
- Macroeconomic factors. gold prices are affected by several macroeconomic factors, such as industrial demand, inflation, interest rates, dollar strength, and geopolitics. Before trading gold, you should have a good understanding of these.
- Regulatory risks. Government policies can play a role in the way gold prices move. Export restrictions or changes in tax regulations could introduce unforeseen risks.
- Deflation. Gold is considered a hedge against inflation. However, it may underperform during deflationary periods when currencies gain strength.
- Risk of contango. Contango is when the futures price of gold is higher than the expected spot price at the expiry of the contract. For futures traders, when gold is in contango, it can diminish returns.
Gold trading strategies
Copy link to sectionThere are diverse opportunities when trading gold, and you can use various strategies to make the best decisions. Understanding these strategies is essential to navigate the gold market effectively. Below are several general trading strategies that can be applied to gold trading.
- Trend trading. Trend trading is a basic strategy and involves identifying and following the prevailing price direction of gold. Technical indicators like moving averages can help in identifying trends. You can also look for higher highs or lower lows in golds price action. Traders look to profit by entering positions in the direction of the established trend, whether an uptrend (bullish) or downtrend (bearish).
- Range trading. When the gold market is not trending, it will consolidate or move within a defined range or channel. You can use a range trading strategy whereby you aim to buy at the lower end of the range and sell at the upper end. Understanding support and resistance levels within a range is essential to trade this strategy effectively.
- Moving averages strategy. Moving averages are technical indicators that smooth out price data and help identify trends. One common strategy is to compare short-term moving averages (e.g. 10 day), with longer term moving averages (e.g. 50 days). You can then look for crossovers and divergences between these moving averages to find signals for buying to selling gold.
- Breakout trading. Breakout trading involves identifying key price levels, such as support and resistance, and entering positions when the price breaks through these levels. Traders expect the breakout to lead to a significant price movement in the direction of the breakout, allowing them to capture potential gains.
- Fundamental analysis. Fundamental analysis is a strategy used to evaluate the intrinsic value of gold. This means rather than focusing on gold ‘s price chart, you can analyse data like supply and demand, geopolitical events, and other variables that impact its price. You can then use your findings and technical analysis to place a trade.
The above strategies are just a few of the many that you can use to trade the gold market. Remembering that each strategy has its own rules and risk management techniques is important. Professional gold traders often combine multiple systems and adapt their approach to market conditions.
Bottom line
Copy link to sectionOne of the key benefits of trading the gold market is the various ways you can get involved. There is a trading vehicle for everyone, from gold stocks and ETFs for long term speculators to spot gold, futures, and CFDs for short term traders. A trusted and regulated trading platform is a must if you want to navigate the gold industry successfully.