How To Profit More From Trading Gold: Insider Tips You Should Know

Gold is considered a safe-haven investment that acts as a safety net during a recession or when markets decline. However, as history has shown, gold prices have not always been on an upward trajectory. Gold trading has become popular as investors from all walks of life use gold as a hedge against any market decline.

Here are a few tips to help increase your profit when trading gold (GLD).

1. Mindset: Determine if you are trading or investing

We must know which side we are going for before venturing into gold trading. This is important as the strategies, time horizon, and platforms we are going to use will differ greatly. 

Investing in gold means that we are purchasing gold to store on a long-term basis. We would recommend that investors buy physical gold or gold certificates instead of opening a position on a trading platform as the holding costs will deplete the profit greatly in the long term. One downside would be the storage costs for physical gold when you buy a huge quantity.

On the other hand, if you are trading gold, it is usually on a shorter time frame and allows you to avoid hefty fees as a result of holding costs.

2. Understand the four factors that affect gold price movements

 

collage of the factors that affect gold price movement

Like any other commodity, there are several factors that influence the movement of gold prices:

Central Bank's monetary policy

We recognise that the price of gold is closely linked to the US Dollar (USD), so inevitably, the value of USD will have an impact on the movement of gold. Thus, traders should note that any USD-related movement is very much capable of moving the market, particularly in tandem with policy changes/developments.

Supply and demand

Demand and supply influence every commodity that is traded, and gold is no exception, especially since it is considered as both a SAFE HAVEN and a scarce NATURAL RESOURCE.

Many investors will search for assets that are called risk-off assets, one of which is gold. If global market conditions are poor, the demand for gold will increase because supply is limited for such natural resources.

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Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. ...

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