What is the gold market?

The gold market is a general term that refers to all the channels through which gold or its derivatives are traded globally and across all time zones.

This comprises physical markets and markets for investors and speculators such as exchange-traded funds (ETFs), futures and options markets.

What is gold trading?

Gold is one of the oldest and most trusted forms of currency in the world. Gold’s intrinsic worth, or “safe haven” appeal, makes it a popular investment and an effective way to diversify a portfolio for traders.

Trading gold involves buying the metal with the expectation that price appreciation will make it profitable to sell it later. This can be accomplished by purchasing gold in physical form, such as bars, ingots, or coins, or by investing in financial instruments that monitor the price movement of gold. These financial instruments also enable traders to take short positions on gold, that is, to sell in expectation of a price decline, which will make the asset profitable for buying later.

In the current context, trading gold refers to speculating on the price of gold through buying and selling derivative financial instruments rather than acquiring the precious metal in physical form. As a result, gold traders can participate in price movements without having to handle or store the underlying assets.

There are several options for trading gold that cater to each trader’s strategy and risk profile. These include trading spot gold contracts, gold futures, gold options, ETFs, and stocks of gold mining companies.

How does gold trading work?

The gold ticker symbol is XAU. The letter “X” stands for “Index,” whereas the letter “AU” stands for “Aurum,” the Latin word for gold.

Using a ticker simplifies product searches on the MT4 trading platform.

The most popular currencies to trade against gold CFDs are the USD, AUD, CHF, EUR, and GBP. The symbol for a gold trade against the US dollar is ‘XAUUSD’, while the symbol for trading gold futures CFDs is ‘GOLD.fs’

Bullion spot CFDs are priced using the underlying spot market, whereas futures CFDs are priced using futures contracts.

• Gold CFDs: A CFD allows you to trade the real-time price movement of gold without purchasing physical gold. Because CFDs are leveraged products, you only need a modest investment to have full exposure to the underlying trade. It is important to note that the profit or loss is determined based on the whole size of the trade position, so profits and losses are amplified.
• Gold futures: If you anticipate that the price of gold will rise in the future, you can enter a contract with a seller and agree on a fair price to be paid today. When the actual gold is delivered at the end of the contract, you can sell it for more at a profit.