Gold Trading

One common method of portfolio diversification is through trading in commodities and precious metals like gold. The guide you need to trade the gold market is right here.

Why Trade Gold?


Experienced traders diversify their portfolios to reduce risk. Because the price of gold tends to negatively correlate with stock market indices, trading in commodities like gold is thought to be a great way to achieve this.

A hedge against inflation

Gold is inflation-proof, whereas currencies lose value over time as a result of inflation. Gold prices were hardly impacted by the global financial crisis that hit markets in 2008 and after.

Store of value

Approximately 95% of the gold in the world is kept as jewelry or in bullion vaults , and the supply is expanding very slowly. Because of the laws of supply and demand, its value exhibits little volatility.

What affects gold prices?

Central banks

These institutions buy and sell gold to regulate their reserves and stabilize the value of their national currencies. This consequently impacts gold prices.

Crude Oil

Crude oil and gold are strongly linked as their trade is denominated in dollars. A rise in the price of crude oil increases inflation, which in turn affects the price of gold.

US Dollar Value

Since gold is quoted in US Dollars, an increase in the value of dollar automatically adds negative pressure on the gold prices.


Stock Markets

A stock market decline often causes traders to turn to gold and in turn push its price higher.

Trading Tips in Gold Market

Trading gold in practice

Your analysis leads you to conclude the price of gold will appreciate.

You buy 1 lot (100 oz) of XAU/USD at the price of 1,184.60.  One lot equals $100 for every $1 movement in the price of gold.

Winning Scenario

Losing Scenario

The interest in gold spikes and a couple of days later the price is $1,189.70. You decide to sell and lock your winnings. Your profit is calculated as follows: (1,189.70 – 1,184.60) x $100 = $510.

The price of gold does not move your way and the day after the price trades at $1,180.30 . You decide to close the position and cut your losses. The loss in this case is: (1,184.60 – 1,180.30) x  $100 = $430.