Throughout the economic development in history, gold has long been known as a precious metal, with good cause. In addition, in many industries, gold is an in-demand precious metal as well as an ideal safeguard for financial risks, especially in times of macroeconomic and geopolitical instability. The global demand for gold is generally high and this yellow metal is one of the most popular traded commodities in the world.

In recent years, the volatility in stock markets has turned the interests of many traders into gold speculators. In spite of that, many still find it challenging in figuring out how to take advantage of the market forecast and apply it to their trading strategies. Some traders opt for mining and exploration stocks, but a direct trade on gold prices is not represented by this. Physical gold has security and storage issues, in comparison with bullion or coinage. In recent years, the futures market which is the gold contract for difference is introduced as a much simpler and more accessible alternative.

How to trade gold CFDs

As an alternative way to invest in this yellow metal, trading gold using CFD (Contract for differences) allows you to exchange the underlying properties i.e., the value of gold without necessarily purchasing gold bullion. Gold CFD is marginally-traded; thereby, it increases trader’s exposure to the gold market for just a fraction of the amount of the actual physical gold’s value. The action of buying or selling a certain quantity of gold are just theoretical orders as traders making profits or losses depends on a shift in the gold price.

The key to success in trading gold with CFD is trying to capitalize on this precious metal movement. Traders will heavily depend on their intuition as well as market analysis to predict the price fluctuation and close the order to make the most profit. One of the main aspects that will assist you in predicting the price of gold is the understanding of factors that move the commodity price.

5 elements that affect the gold price

Gold supply and demand

Like other asset baskets, supply and demand have a great impact in determining prices. In the last 40 years, demand for gold has steadily risen as a result of its global financial and cultural appeal. Gold production is regulated by the mining firms, and thus has a vested interest not to over-supply the metal, which might reduce its price. The supply of gold is still reasonably consistent, and the market is subtly shifting relative to demand. The gold demand has transcended its supply and the recycling industry is responsible for this shortage. However, in recent times, the price of gold has been witnessed to be substantially affected by market sentiments that surrounds gold as a hedge and a safe haven. In contrast to other commodities where supply and demand have a more important impact, gold has its own unique characteristics.

Inflation

During periods of vast impact on inflation or deflation, investors tend to turn to gold in order to secure their returns as currencies become unstable and risk degrading monetary savings.

The US dollar

Since gold prices are permitted to free float in the financial markets, US dollars prices have a somewhat inverse relationship. When the dollar falls, some dollar-holding investors seek an alternative store of value. However, the buying power of other investors with alternative currencies may lead to such inverse relationship.

Financial and political instability

Crises and policy uncertainty in the financial markets can weaken the entire economy. In extreme cases, investors in the institutions themselves can lose their hope. Gold prices begin to rise as demand increases.

Central bank policy

Interest rates are a direct indication of an economy on how serious inflation is for a central bank. They also control exchange rates for investors chasing higher rates because of the rushes of capital into certain countries. As a result, monetary policy and the announcement of interest rates by central banks play a role in the gold price. In periods of high inflation, low-interest rates are introduced so that they appear to correspond negatively to gold prices.

Why you should trade gold CFDs ?

Accessibility

Although physical gold can require time-consuming procedures, it is relatively easy and fast to set up a CFD trading account. Gold buying is still very costly, with a premium ranging over $50,000 for a gold bullion. Without capital, trade in gold CFDs is a low-cost way of accessing and investing in the gold market.

Liquidity

Regular rates of exchange in gold, with the exception of EUR / USD, GBP / USD, and USD / JPY, are valued at about $70 milliards and outweigh most currency pairs. The large scale of exchange provides high cash flow to gold CFDs. This high liquidity contributes to a lower trade rate of gold CFDs than other financial instruments and fees normally are very low. Furthermore, high cash means that it is easy to sell CFD futures, which takes us to the next advantage.

The ability to go long or short

Timing your trades will not be a concern if the market rises when trading gold CFDs. The high liquidity in gold CFDs ensures that price fluctuations in both up and down markets can be capitalized on. If you feel that gold is going up against a currency, you’re going long (buying), and if you think the price of gold is going to waver against the currency (selling).

Stability

Gold CFDs are a good tool since they allow traders to profit even though the price falls. They will provide traders with stability in even turbulent markets and an incentive to thrive.

Leverage

CFDs are financial instruments that are leveraged. You don’t have to spend the entire sum expected to open a job. Gold CFDs tend to have high leverage, resulting in low margin requirements. You are required to deposit just $1.000 into your account to open a cumulative deal of $50,000. For example, if you have 50:1 leverage on a $50.000 piece. Likewise, only $500 with a leverage of 100:1 will have to be deposited.

Volatility

The gold market is extremely vulnerable, with its price fluctuating over conventional monetary pairs like EUR / USD, which almost every day see price movements of roughly 50-100 pipes. This uncertainty helps traders to flourish in the gold market in larger numbers.

No contract expiration date

Gold CFDs do not possess an expiration date and traders are independently in charge of when to close a position. This is not only beneficial for you to keep an open position until your desired profit margin but also allows you to take initiative in your own trading.

How to Choose a Good CFD Broker

You should select a reputable broker who provides quality service and customer support before you begin your gold CFD trading journey. At Doo Prime, as a well-regulated broker, we offer nonpareil trading experience especially trading gold CFD with our professional platforms and cutting-edge technology in the industry.

Some of the top outstanding features when choosing to trade with Doo Prime:

Regulation

Doo Prime is one of the Doo Group subsidiaries which was granted multiple international financial licenses in order to provide top-notch service that attends to traders globally. Doo Group currently holds: UK Financial Conduct Authority (FCA), the US Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA), the Mauritius Financial Services Commission (FSC), and the Vanuatu Financial Services Commission (VFSC).

Spreads and commissions

With gold spreads of 0.1 pipes and leverages up to 1:500, the cost of trading CFDs with Doo Prime is substantially lower. With the support from our sister company Doo Clearing, a UK FCA – licensed liquidity provider, with powerful liquidity, Doo Prime commits to ensure the stability and transparency in the bid and ask price.

Trading gold with Doo Prime has never been easier with a variety of CFDs products such as: gold spot (XAUUSD), CME gold futures, and COMEX gold futures along with other 10,000+ trading tools. You can open an account with Doo Prime and enjoy zero-commission with minimal requirement of an initial USD 100 deposit.

Trading platforms

Our trading platforms and tools cater to all levels of individual and institutional traders with different needs and strategies

For trading platforms, we have Doo Prime InTrade which is an easy-to-use and professional trading platform backed by the latest cloud-based technology. Moreover, Doo Prime trading platform also supports MT4 and MT5 equipped with NDD (No Dealing Desk) Mode and Direct Market Access (DMA) to the institutional-grade trading market and electronic communication network (ECN) and offer 8 levels of market depth.

The trading platforms and tools available on Doo Prime forms a solid foundation to provide the best online trading experience to global traders. As we strive to our offerings even further, there will be more new services and features to come in the near future.

Customer support

Doo Prime over the developing years has grown a strong team of experts across 12 cities worldwide with the ambition to provide 24/7/365 multilingual top-notch customer service to our clients anywhere in the world.

Interested to find out more? Contact us via LiveChat on our website today. Or click here to sign up for an account and start trading with Doo Prime.