A guide to gold trading

The price of gold can fluctuate depending on political, social and economic instability. Trading gold is sometimes referred to as a ‘safe haven​’ by traders because, unlike some shares in the stock market, its price is not always affected by governmental decisions or inflated by interest rates. On the contrary, gold can act as a form of insurance, as investors might reallocate assets into the gold market at unstable times. This could increase the value of gold, since its demand might rise as traders attempt to use it as a stock hedge.

So, why do some traders invest in gold? The answer relates to gold hedging. Gold and other precious metals sometimes have a negative correlation with stocks and bonds, depending on the current stability of the economy. This reinforces the idea of precious metals as a safe haven for traders. When their share positions are declining in value, some traders decide to take a chance on gold trading to balance out their potential losses. This is known as hedging in the gold market, and it is a popular trading strategy. This way, traders are attempting to diversify their portfolio as they spread their bets across a range of markets, where the price of gold may increase in response to events that would typically cause the price of stocks and bonds to decrease.

Why not start trading gold with our Sign Up? Practising with virtual funds can help you to build a strong trading strategy before jumping deep into the gold market.

As a gold trader, there are several options for how to trade your asset. An easy option would be to buy and sell gold at its spot price. The spot price of gold reflects the exact current price that a buyer can purchase or sell the instrument for an immediate delivery. Alternatively, it is possible to trade gold through a forward contract, which is an agreement between two parties to buy and sell an asset at a fixed price at a future date. Read more about forward trading​ here.

Spread betting and CFD trading are also popular options, and ALFATRADING-MARKETS offers both across a range of markets, including commodity trading. View our instruments page for Gold – Cash​ to view our competitive spreads, buy and sell prices and margin rates, and the common trading hours that we offer for gold trading. We also have a brand new US Gold share basket​ to trade through spread bets or CFDs, which tracks the top 15 shares within the gold industry. This basket is valued at around $20 million and gives exposure to the largest gold stocks​ in the US, including Newmont, Barrick and Franco-Nevada.

This is one of our most popular products for trading on gold. Gold spread betting​ allows you to trade tax-free* while taking advantage of the gold market’s price movements without owning the physical asset. Spread betting enables you to open a position to invest in gold based on whether you believe the price of gold will rise or fall. Depending if the market moves in your favour or not, profits or losses will occur.

Gold CFDs​ (contracts for difference) are leveraged products that only require a trader to deposit a small percentage of the overall trade value, which is referred to as margin requirement. Unlike buying outright at the gold spot price, you do not own the underlying asset (similar to spread betting) but agree to exchange the difference in value from the time difference between opening and closing the position. Please note that where there is opportunity for profit from trading gold, there is equal opportunity for losses. Read more about the meaning of CFDs​ here.

As mentioned, we offer a large number of shares and ETFs, as well as the physical gold commodity, to spread bet and trade CFDs on through our web-based trading platform, Next Generation. Our price charts are customisable to your trading preferences, so you can see your data displayed as clearly as possible when entering and exiting positions.

Register for a live account now to start trading on gold, or you can practise first with £10,000 worth of virtual funds beforehand in order to familiarise yourself with our award-winning platform.