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Gold in Forex Market

It can be a great way for foreign exchange investors to gain exposure to commodities and diversify their portfolios. Its stability compared to other assets during global crises means it is a popular hedge against inflation. Often times, commodities get a lot of attention in major market moving events when investors get scared and rush to the metal as a safe haven.

It can be a great way for foreign exchange investors to gain exposure to commodities and diversify their portfolios. Its stability compared to other assets during global crises means it is a popular hedge against inflation. Often times, commodities get a lot of attention in major market moving events when investors get scared and rush to the metal as a safe haven.

To trade gold on Forex, you need to go through a few quick steps:

  • Open an account or log in to an existing account
  • Search for a currency pair on your platform
  • Decide whether to stay long or short on price
  • Enter your positions, add stops and limits if necessary
  • Monitor and close your transaction

Not ready to trade the live forex markets? Trade gold-linked currencies in a risk-free environment with a demo account.

Forex Gold Risk Factors

There are a few factors to consider before trading gold in the Forex markets:

  • Liquidity – ease of entering positions can fluctuate throughout the day. However, the average daily trading volumes of gold pairs tend to exceed all currency pairs except EUR/USD, GBP/USD and USD/JPY.t
  • Supply and demand – like any market, when demand goes up and supply goes down, price goes up and if supply goes up and demand goes down, prices go down. Half of global gold demand comes from jewelery production, and the other 40% comes from investors.
  • Market volatility – as we mentioned earlier, the volatility behind the price of gold comes from its use as a safe haven. When other high-risk assets aren't performing, people switch to gold. Mutually, when risky assets are strong, gold trading levels drop.

Buying Gold or Forex Gold?

Investing in gold means buying and holding it for a long time, i.e. months or years. Trading gold means both buying and selling several times in a shorter period of time, such as a few days, hours, or even minutes. You can invest in Gold by purchasing physical Gold in the form of coins or bullion, or by purchasing small shares of Gold bullion held in secure vaults. However, these methods are not practical for trading as they are slow and do not allow short selling. Also, Gold coins do not directly reflect the value of Gold as they are marked on sale. Holding Physical Gold as an investment can also involve problems with proof and custody.

Trading Gold can allow you to make more frequent and larger profits from both upward and downward fluctuations in Gold prices.

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