How To Trade Gold 2020

How To Trade Gold

Welcome to Trading Brokers step by step guide to trading gold in 2020. Here you will find an easy to understand explanation of gold trading. This includes how to trade gold online, what you need to trade gold and how to open a trading account with a broker so that you can start trading gold online today.

Eightcap is a regulated broker offering over 200 CFD trading instruments on the user-friendly MetaTrader platforms including Forex, Stocks, Indices, Cryptos & Commodities. The broker has low commission fees, tight spreads, 1:500 leverage, rapid execution speeds, fast & free funding options, trading tools, educational materials, managed accounts & industry leading customer support.

Terms & conditions apply
Margin trading involves a high level of risk, and may not be suitable for all investors. You should carefully consider your objectives, financial situation, needs and level of experience before entering into any margined transactions with Eightcap, and seek independent advice if necessary. Forex and CFDs are highly leveraged products which mean both gains and losses are magnified. You should only trade in these products if you fully understand the risks involved and can afford losses without adversely affecting your lifestyle (including the risk of losing substantially more than your initial investment).

Maybe you have heard of gold trading online or through a friend. Perhaps you are looking to trade and are curious about the different options available to you. Whether you are looking to speculate, invest or just learn more, this guide on how to trade gold can help you along your journey.

History of gold

Gold trading goes all the way back to the Roman Empire when it was used as a form of money. Nowadays, traders can buy and sell gold online at the click of a button with just an internet connection and a laptop. The volume of gold that is being bought by central banks is considered to be at its highest level, making it a popular choice for online trading.

Gold is a commodity that is often seen as a source of wealth that can be inherited in its physical form. Whilst gold is used in commercial and industrial activities, such as in jewellery and mobile phones, it is also speculated on by traders, hedge funds and even central banks. When there are times of economic uncertainty, many see gold as a “safe haven” asset. This is primary due to the fact it can be used to conduct energy and also melted down to form currency.

Gold has been used as a medium of trade and a store of value for thousands of years, and trading gold in the 21st century is just as relevant as it’s always been. Gold remains a valuable store of value, with some investors using it as a hedge against financial crisis, inflation, and geopolitical risks.

The gold market is one of the largest and most liquid markets in the world, giving traders ample opportunities although it can be volatile at times.

How does gold trading work?

One of the most popular ways to trade gold is via CFDs (contracts for differences). These financial instruments allow traders to speculate on both rising and falling prices without actually owning the underlying asset which is gold in this case. This can be more convenient for some traders and means there is no need for storing or securing physical quantities of gold.

Traders would open long (buy) positions, if they think the price of gold will rise or short (sell) positions if they thought that the gold price will fall. The difference in price between the entry and exit price is the traders realised profit or loss, excluding any broker commission and fees.

The most common gold CFD instrument to trade on is XAUUSD. This is gold priced against US dollars. With a trading broker, users can speculate on the price of gold (XAUUSD), as well as on other related markets such as XAUAUD which is gold priced against the Australian dollar.

The majority of brokers who offer gold CFD trading will provide access to leverage which enables a trader to control a larger position size with a small deposit. For example, an account balance of $2,000 with 1:5 leverage, could theoretically take a position size of $10,000. Whilst this can increase profit potential, it also significantly increases risks and the potential loss from a trade. Therefore, it is imperative traders have a clear understanding of how leverage works and the risks involved.

Where to trade gold?

Many online brokers provide gold trading. You can see a selection of our best brokers below with whom you can open a trading account to buy and sell gold online.

Broker
Rating
Regulated
Min. Deposit
Founded
Max. Leverage
1.

FCA, CFTC, NFA, BaFin, FINMA, ASIC, FMA, MAS, FSA, FSCA, DFSA, JFSA, METI, MAFF

Min $250 Deposit

1974

1:200

Review Trade! Trade!
Terms & conditions apply
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
2.

ASIC, FCA, DFSA, SCB

Min $200 Deposit

2010

1:500

Review Trade! Trade!
Terms & conditions apply
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.3% 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.
3.

ASIC, VFSC

Min $100 Deposit

2009

1:500

Review Trade! Trade!
Terms & conditions apply
Margin trading involves a high level of risk, and may not be suitable for all investors. You should carefully consider your objectives, financial situation, needs and level of experience before entering into any margined transactions with Eightcap, and seek independent advice if necessary. Forex and CFDs are highly leveraged products which mean both gains and losses are magnified. You should only trade in these products if you fully understand the risks involved and can afford losses without adversely affecting your lifestyle (including the risk of losing substantially more than your initial investment).
4.

ASIC, CySEC, IFSC

Min $5 Deposit

2009

1:880

Review Trade! Trade!
Terms & conditions apply
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.57% 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.
5.

ASIC, BVI, CBI, FFAJ, FSA, FSCA

Min $100 Deposit

2006

1:400

Review Trade! Trade!
Terms & conditions apply
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% 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 moves gold prices?

There are a variety of different factors which can have an influence on the price of gold, some of which can change over time. Amongst the major influences are the following:

  • Economic uncertainty: When there are periods of economic unrest, the price of gold can be impacted as some investors may buy into gold’s safe-haven status. One example of this is in 2019 when the gold prices trended higher than usual due to escalations in the US-China trade war.
  • Interest rates: If there is a rise in interest rates, gold may become less attractive to investors who will look to other asset classes which could benefit from rising interest rates, such as currencies or bonds.
  • Global economic data: As gold is considered by many to be a safe haven asset, if there are any significant changes in global economic data, this can have an impact on the demand for gold. An example of this would be if the global economy is slowing down and investors looked to exit other investments in favour of gold.
  • The US dollar. As gold is denominated in US dollars, currency movements in the US dollar can have an impact on gold prices. Thus, there is a possibility that a falling US dollar may push gold prices higher whereas an increasing US dollar could push gold prices lower.

All of these influences are a form of fundamental analysis which can be used to help try and anticipate future price movements. Some traders would combine fundamental analysis with other market analysis such as technical analysis, price action analysis and sentiment analysis to form a more complete trading strategy. It really depends on your individual goals and preferred trading style.

Why trade gold?

Gold is the most actively traded of all metals, and for good reason. It has unique properties of durability, malleability and conductivity that make it a desirable and in-demand metal for everything from industrial applications to jewellery. Just like most other commodities, the price of gold is shaped by market forces of supply and demand. Couple the high demand for gold with a limited supply, and you have all the ingredients for a sought-after commodity that can keep its value over long periods of time.

Traders will usually trade gold as way to try and earn profit from the variation in gold prices. When trading gold CFDs you can speculate on prices without actually needing to physically own the gold. This makes it a convenient trading method for anyone who has a trading account with an online broker.

Gold is also traded as a way to diversify a trading portfolio and hedge against other investments such as stocks and bonds. Investors may choose to buy gold as a safe haven asset for a long-term hold.

How to trade gold online?

If you have taken the time to read through the above, you should hopefully have an understanding of how to trade gold. Here is a summary of the key steps:

1.     Decide if gold trading is for you

Trading gold online carries an element of risk and can take more time than other forms of investing. You will need to research the gold market, manage your positions, follow market news and decide how to react to it. It is important to understand the risks and dedication that comes with trading gold online.

2.     Educate yourself

Before trading gold, it is imperative to learn as much as possible about investing and trading online. Any mistake could prove to be costly. There is an abundance of free educational materials provided by many online gold brokers that can help you to improve your trading skills and knowledge.

Most gold brokerages will also provide a free demo trading account so that you can practice trading gold online with virtual funds in order to familiarise yourself with the trading platforms and practice your trading strategies until you feel confident enough to open a real trading account.

3.     Choose a gold broker

In order to trade gold online, you will need a broker account and trading platform to execute your trade positions through to the market. When choosing a broker, there are a few important things to consider such as regulation, commission fees, platforms, tools, education, funding options and customer support.

If you do not have the time to research brokers, you can see a list of our best brokers that we have already prepared to help traders. If you would like to know more, you can also view our detailed guide on how to choose a trading broker.

4.     Research gold

If you have made it this far then you may be ready to start trading gold online! The next step is to research the gold market to help increase your knowledge. The best brokers should have this information conveniently displayed for you within their trading platform.

5.     Have a gold trading plan

Some of the most important factors that can help determine gold trading performance can be the trading plan and discipline. It is important to have a solid trading plan personalised to your own needs that includes the money management and trading strategy that you will use. Most experts and professional traders would try to not let negative emotions such as fear, anger and greed affect their trading strategy.

6.     Buy and sell gold

Once you feel ready to trade gold online, you can analyse the market to help decide if and when you will place your trades. After placing a trade on gold, you will need to keep track of how it performs and manage it according to your trading plan. Some investors will keep hold of gold trades for the long-term, whereas traders may buy and sell gold on a daily basis.

Is gold trading right for me?

Gold trading is a popular choice for long-term investors and active traders. It can be suitable for scalping, day trading and swing trading. Traders who would usually trade forex, trade stocks, trade indices, trade commodities, trade cryptocurrency, may look to diversify their portfolio.

However, it is important to understand the significant risks involved with trading gold online, especially when using leveraged positions. Most experts would suggest trading on a demo account with virtual funds to begin with.

This can be a useful way to familiarise yourself with how to trade gold and using trading platforms whilst allowing you to practice your trading strategies until you feel confident and produce consistent results. Most gold brokers provide unlimited demo accounts free of charge.

Not sure which gold broker to trade online with?

If you are still unsure which gold broker is the best for you to trade online with then you can use our free online broker comparison tool to quickly compare brokers based on regulations, minimum deposit, leverage, spreads, commissions, funding options and more. You can also read our broker reviews and choose from our best brokers, best trading platforms, best copy trading platforms, best social trading platforms and best trading apps. If you would like to look for the best trading brokers in a particular country, we have pages dedicated to our best brokers USA, best brokers UK, best brokers Australia, best brokers South Africa and best brokers Canada.

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