Getting started as a gold trader is easy but becoming a consistently profitable trader takes skill and knowledge. We’ve produced this page, as well as a series of other commodity trading articles, to guide you on your gold trading journey. If you’re ready to start trading gold online, check out the choices below. Otherwise, keep reading.
Compare the best platforms for trading gold
Ready to trade gold? We’ve reviewed some of the best online gold brokers in the table below. Check it out.
Buy gold bars, right now
The most straightforward way to get into gold trading is to simply buy the physical commodity in the form of gold bars or gold coins. Here’s a list of the top websites offering physical gold for sale.
How to trade gold online – an easy six-step guide
Before you get started as an online gold trader it’s a good idea to read up on the different trading methods. Then you can choose the method that works best for you.
- Know your trading strategy. The method you use to trade gold online should be consistent with your level of knowledge. Don’t get overambitious if you’re just starting out.
- Decide your budget. The best options for a trader with £1,000 at their disposal won’t be the same as a trader with £50,000 or more in his account. Figure out your budget before you make your first trade.
- Choose your gold type. If you’re trading physical gold, you have multiple options at your disposal. You can trade gold bars in the most common one-ounce size or larger denominations. You can also start trading gold coins, available in countless different designs, originating from many different mints.
- Select your broker and sign up. Pick a broker with a strong reputation, an easy-to-use trading platform and reasonable trading fees. Once you’ve found the one you like, sign up and you’ll be ready to make your first trade.
- Assess and manage your risk. A stop-loss order is a trading strategy that allows you to limit the size of your loss by setting a sell order that will automatically trigger once your gold trade falls to a certain price. Figure out how far below your buy price you want your stop-loss order to be, then get ready to place your stop-loss order right after you make your first trade.
- Place your first trade. You’ve done all your due diligence, figured out your pressure points and devised a trading strategy. Make your first trade, and your online gold trading journey will begin.
Types of gold to trade
There are many different methods you can use when gold trading. Here’s a rundown:
Contracts for difference
A contract for difference (CFD) is a contract between two parties, namely a buyer and a seller. The buyer must pay the seller the difference between the current value of an asset (in this case gold) and the asset’s value at contract time.
- Pros of CFD Trading: You can take both long and short positions, betting on the value of gold to go up or down. CFD brokers don’t usually charge transaction costs, instead making their money from the spread (the difference between the bid and ask price). CFD trading lets you trade with leverage, giving you the ability to make larger trades with a smaller amount of capital.
- Cons of CFD Trading: Trading with leverage has the potential to increase your exposure to risk. If the price of the asset or position drops below a certain point and you don’t have enough money in your account to support the position if the price falls, you could end up with nothing. If you leave a CFD position open overnight, you’ll be charged a fee.
If you want to learn more about CFDs and trading, check our CFD trading course.
Gold certificates are certificates of gold ownership. Allocated certificates mean you own specific bars of gold, whereas unallocated certificates aren’t linked to any specific bars of gold, but rather the dollar value of the gold you own.
- Pros of gold certificates: With a gold certificate you can avoid the hassle, worry, and cost of storing and insuring gold bars or gold coins. Transaction fees are often lower than the fees associated with other gold trading methods.
- Cons of gold certificates: Precious metals certificates are considered collectables by the IRS, so you’ll have to pay a 28% capital gains tax on your net gain if you sell, assuming you’re in the U.S. Certificates often require larger minimum amounts than straight purchases of bullion, making certificate purchases less affordable. If you buy a precious metals certificate and the certificate issuer goes bankrupt, you may not be able to recover 100% of your investment.
A gold futures contract is an agreement to buy or sell gold at a set (future) time and price.
- Pros of gold futures: You can use a futures contract to hedge against price fluctuation. The pricing model for futures contracts is simpler than it is for some other trading methods.
- Cons of gold futures: Unexpected future events can cause big price fluctuations that might hurt your trade. Futures contracts have an expiration date, so the contracted price for a gold contract can become less attractive as the closing date gets closer.
Gold options let you buy or sell gold bullion on a future date at a set price. Gold options differ from gold futures because there is no ironclad contract involved, and you have the option not to buy or sell if you wish.
- Pros of gold options: Trading with leverage gives you a chance to make bigger gains using smaller amounts of capital. You can either go long or short on your options trades, meaning you’re betting on the price of gold to either go up or down.
- Cons of gold options: Options contain a time value that’s constantly diminishing, so you need to be right within a certain amount of time. Transaction fees tend to be higher than other forms of gold trading.
An ETF (Exchange Traded Fund) is a type of investment that contains multiple assets and is traded on exchanges, in much the same way as stocks are traded.
- Pros of gold ETFs: If the price of gold goes up you stand to benefit, without having to store and insure any physical gold bullion. Low management fees keep cost down.
- Cons of gold ETFs: If the price of a particular precious metal skyrockets, you’ll make more money by owning that metal than an ETF full of different metals.
Research what affects the gold price
There are many factors that can affect the price of gold. Here are some of them:
- 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.
How to sell your gold trade
When selling your gold online, here are the five basic steps you need to take:
- Log in to the trading platform you use to trade gold.
- Open your existing trade.
- Check the price of the gold coins, gold bars, or other gold-trading vehicle you own.
- Check the spread being offered by the broker to make sure you can sell at a price close to the one you want.
- Sell your position. When selling, you’re probably either taking a profit or cutting your loss short.
Online gold trading tips for beginners
Hopefully you’ve now got a broad understanding of how to trade gold online. Here are five tips to follow if you’re a beginner getting ready to trade gold online.
- Set your trading goals. Do you want to make money fast, or hold for the long haul? By knowing your goals, you can build a sound plan and stick to it instead of getting rattled by emotions.
- Figure out your risk tolerance. It’s OK to be a daredevil, and it’s ok to be frightened by risk. The important thing is that you know yourself. Evaluate your own tolerance for risk, then you can decide whether you want to make riskier trading moves, such as trading with leverage.
- Know your budget. If you have a small budget, a trading strategy that lets you buy and hold might be a better bet than, say, a CFD (where holding for more than a day can already start to rack up fees, and too many fees can sap a small budget). If you have a larger budget, you’ll have more trading options at your disposal.
- Assess market conditions. Are gold prices trending up or down? Trying to fight against the tide can often end up being a losing battle.
- Pick the gold trading method that works best for you. Trading gold options is very different to buying gold coins or a gold ETF. Make sure you fully understand the trading strategy you want to follow before you jump in.
Try some of our investment courses for beginners
Not quite ready to trade gold online? That’s ok. Check out our easy-to-follow courses on commodity trading to continue your gold trading education.