Gold is probably one of the world’s most traded commodities in the world. There are several successful trading strategies that you can use to successfully invest in this asset. For instance, you can use the Gold/Silver ratio to better determine when to enter/exit the Gold market by measuring the relative relationship between both assets.
You can also use technical analysis to identify important levels on the chart where prices might react. These could be support and resistance levels or mathematical indicators which can help predict changes in Gold’s price direction such as moving average crossovers or RSI divergences.
Find the right broker
Before you dive into using any trading strategies, first make sure that you’re using the right broker that offers advantageous trading conditions so you can maximise your performance.
To select the right broker for your needs, you should take the following into consideration:
- The leverage you want to use
- The kind of account you require
- The capital you have
- The base currency of your account
- The trading tools you need to analyse the markets and make better investment decisions
In any case, you should always select a broker that is well-known, reliable and regulated, as this will ensure that you’re investing in the best environment.
5 things to know about Gold
While elaborating your trading strategy on Gold, you need to remember a few factors regarding the yellow metal – things that can influence its price or help you fine-tune your investment strategy.
1# Investors seek Gold during times of political and economic uncertainty and instability.
2# Gold is negatively correlated to the USD.
3# Gold is often used as an inflation hedge.
4# Gold demand is mainly a result of jewellery. The demand then comes from physical investments (like the Gold used to create bullion, medals, coins, etc.) mostly from individuals and central banks, and from the industry (dentistry, electronics and computers, medical, aerospace, etc.).
5# Investment managers often use Gold in their portfolios to reduce their overall portfolio risk.
You could of course physically own Gold, but it might not be the best option, as you’ll have to pay the full amount during the initial purchase – not to mention the storage costs.
The best way to profit from Gold’s price variations is to invest in derivative products that replicate its price evolution.
Gold-oriented financial products usually offer leverage and margin trading which allows you to have greater market exposure whilst only putting aside a small amount of the total value of your investment (called margin).
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