Precious metals like gold and silver are coveted by everyone involved in the financial sphere, including traders, investors, and bankers. They are a considered a viable portfolio diversifier and may provide the investor with a hedge against inflation. Metal trading does not mean simply owning the physical metals, but also giving investors access to metal ETFs, CFDs of certain metals traded as commodities, as well as mining company stocks and the derivatives market.
A beginner starting to trade in metals should gather extensive knowledge about precious metals as well as the ins and outs of CFD trading.
Precious metals are naturally occurring rare metals having a high inherent value. They do not corrode, oxidize, or tarnish naturally. Gold, platinum, silver, and palladium are the major precious elements. Even though they are mainly used in jewelry making, they have a wide variety of other applications. Metals have always been used as currency throughout human civilizations, and some metals, like gold, are used in electronic devices like computers.
Precious metal trading
The precious metals that are most commonly traded are gold, platinum, silver, and palladium. All these metals are used in a wide variety of applications, like jewelry, medicine, electronics, and other industries.
Gold trading online
Gold is the most sought-after precious metal. It has been used by man throughout the course of our entire history for making jewelry and decorative items. More recently, it is used in electronic devices like smartphones and computers due to its good conductivity. It is the go-to metal investment for many traders and investors during a market crisis.
In gold trading, investors speculate on the price of gold in the market to pursue potential profits. In most cases, transactions are handled using cash rather than physical gold coins or bars. Gold trading online as CFDs is an extremely risky business since speculation can sometimes go wrong. If your speculations are right, then you have the chance of gaining profits. If you speculate in the wrong direction, you may incur heavy losses. This makes it absolutely imperative to learn about the market before investing in gold-related CFD instruments. The value of gold is fairly stable, but it may experience a significant rise and fall owing to its popularity.
Factors affecting gold prices
The price of gold in the market is dictated by demand and supply. The price falls when supply is saturated without any increase in demand. Similarly, when there is an increase in demand without much change in supply, prices rise.
The various factors that impact gold prices are:
- Gold prices rise during times of political and economic instability. War and inflation will prompt investors to invest in gold as protection over other high-risk assets.
- The demand for gold for jewelry and industrial uses is fairly stable. This may keep gold prices relatively stable during economic stability.
- The discovery of new gold mines can impact prices for a short period.
- Gold is priced in US dollars. Any fluctuation in the value of the US dollar can influence the price of gold. A decrease in the value of the US dollar may be of interest to
- CFD investors trading gold prices using other currencies.
How to do gold trading online via CFDs
Trading gold online in the form of CFDs allows you to invest in the price movements of gold in both directions (increases as well as decreases) without having to purchase any actual gold. The various ways you can trade gold prices include as a commodity as well as an ETF that tracks various gold-related companies. In a nutshell, the way CFD trading works is that if you expected the price of gold to increase, you’d open a ‘Buy’ deal or ‘Go long,’ whereas if you expected the price of gold to decrease, you’d open a ‘Sell’ deal or ‘Go short.’
The first step is to create a trading account. You can create a trading account with an online CFD trading brokerage that best matches your needs. You can always test your trading strategy using demo accounts. There are numerous CFD brokerage sites available on the internet.
Silver trading online
Silver is another popular precious metal that is regularly used for its malleable, antibacterial, and conductive properties. It has tremendous applications in the electrical industry, water purification, and dentistry sectors. A number of reputed online brokerages offer silver trading via CFDs.
Platinum trading online
Platinum, in its pure form, is used in dentistry and for making jewelry. Its alloys are used to make magnets. Platinum is also in life-saving chemotherapy drugs to treat lung, ovarian, and testicular cancers. They are also effective against lymphomas.
Palladium trading online
Palladium is related to platinum by origin, function, or structure. It is used in industries to aid catalytic reactions and in fuel cells to run cars and buses. It is also used in dentistry and jewelry making.