Trading and investing in gold online: in brief
- The price of gold is calculated in dollars per ounce and is quoted on the NYMEX market in the United States.
- It is essential to analyse the gold price using technical and fundamental analysis before investing or trading
- It is possible to buy physical gold, paper gold or stock market gold via contracts.
- You can trade gold on the stock market using ETFs or CFDs.
To maximize your chances of carrying out valuable gold price analysis and trying to spot future trends, you can use technical analysis, especially if you're trading with a short-term investment strategy. This asset is particularly volatile so you need to study the market volatility before buying or selling.
It's also interesting to follow certain fundamental indicators such as the rate of the US dollar against other currencies and which will make the purchase or sale of gold by countries with other currencies more or less interesting. So keep an eye on the Forex market.
Of course, given that gold often plays a role of safe haven in the event of a major economic crisis, you'll also need to study the major trends that occur on other markets particularly the evolution of the price of the stock indices most representative of the world economy.
Finally, the price of gold can be influenced by production, which is increasingly limited, and by political decisions relating to imports and exports of this precious metal. Purchases from Asia and countries such as India and China, which are major importers, should be followed with great attention here.
If you are an investor who takes a keen interest in the commodities market, and more specifically precious metals, gold is definitely an asset that may interest you, due to several factors. The first advantage in trading gold is that this value presents a very high volatility compared to other stock market assets. This means that the movements recorded by gold prices are very often large in scale and therefore allow for short-term strategies. But it also represents a greater risk.
Although gold is no longer really considered a safe haven, it remains an investment of choice for institutions such as banks, especially in times of high inflation because gold is not sensitive to this factor and continues to keep pace as currencies lose value.
Finally, gold is an asset that is very responsive to the phenomenon of supply and demand. It's therefore possible to trade this value in the longer term, based on the fact that production is currently reaching its limits, while demand may increase further due to its use by industry, especially the Chinese industry which is expanding rapidly.
As you probably already know, gold is considered a safe haven in the investment world. This means that it tends to maintain its price or even increase in value when other financial markets are in difficulty. This was particularly the case during the start of the economic crisis in 2008 with a real surge in the price of an ounce of gold as well as more recently during the Covid-19 crisis.
In this sense, both long-term and short-term strategies are possible with gold. However, it is better to buy gold at the right time if your investment horizon is longer than a few years, meaning buy it when its price is relatively low and therefore most likely to earn points.
To trade gold for the long term, it is common to buy physical gold either online or from a bank or dealer, of course taking into account the costs of storage and preservation of your gold. It's still possible to take a long position in the gold market with CFDs, but, it is better not to take out leverage effect in this case.
There are several ways to invest in gold on the stock market. For example, banks offer gold accounts that allow you to hold a certain amount of gold with the aim of reselling it later. You can also buy and store physical gold for the same purpose. However, these two solutions have the drawback of having high costs and low profitability.
Trading gold through CFDs is also possible and increasingly popular. This method, offered by online brokers, allows you to speculate on the rise or drop on the price of gold by using what are called "contracts for difference" and without having to buy physical gold.
There seems to be more and more online trading platforms, also called “brokers” or “online brokers” that are integrating gold into their available assets. The principle of these platforms is precisely to allow everyone, individuals and professionals alike, to speculate on different assets such as currencies, stock market assets and even commodities, which are particularly popular assets.
By registering on one of these platforms, you will be able to deposit money and use this capital to trade up and even down in gold prices according to the strategies and analyses you have set up. But these platforms are not suitable for novice traders because they require some knowledge of the market.
Once you have made your initial deposit, you will be able to trade directly in the market through what are known as CFDs or contracts for difference. When you think the gold price is going to rise, you simply trade the amount you want to buy on the asset, and sell your position when the price has risen sufficiently.
Conversely, if you think that the price of gold will drop, you can take a short position and sell your position when the price has dropped sufficiently.
A fundamental analysis is, as we mentioned above, one of the types of analysis that is essential for trading gold and understanding its current and future trends with technical analysis.
This analysis is based more specifically on the study of various factors external or linked to the gold market, which are known to influence the price of this commodity. Check out some simple examples of elements that you must integrate into this fundamental analysis before buying gold on the stock market:
Of course, the list that we have just mentioned isn't the only one that you'll have to take into consideration when carrying out your analysis before buying gold on the stock market. In fact, depending on the period and the specific global economic context, you'll find other fundamental indicators that may be useful to you in the context of this analysis. Overall, you should make sure to follow all the news in this market very closely and try to identify events or publications that have had a real impact on the price per ounce of gold in the past.
But also remember that fundamental analysis is not the only essential analysis to try to anticipate the next gold prices. It's important to systematically use a technical analysis which, as you'll see, is based on the study of the value's graphic movements.
As we mentioned above, gold is an asset that shows very high volatility in the market. This means that its price movements can be rapid and of a significant magnitude. Therefore, technical analysis is essential before taking any position on the price of gold and even before any purchase of physical gold. This analysis will allow you to interpret the historical gold stock charts in order to spot signals of rising or dropping prices, and also identify a trend, its continuation or its probable reversal and even to determine how volatile the market is over a period of time or at a specific time.
The stock charts that are offered by online brokers are usually customizable and allow full technical analysis. It is possible to display several technical indicators there without having to calculate it beforehand leaving you free to interpret them according to your knowledge.
Among the indicators most used by gold traders, there is of course the MACD, moving averages, Bollinger bands or even pivot points as well as support and resistance levels.
Gold, coveted for centuries for its beauty, rarity and durability, has had a chequered history in terms of price. Influenced by various factors such as supply and demand, inflation, geopolitical events and economic changes, its journey has been punctuated by peaks and troughs.
Here are some key milestones in the development of the gold price:
Antiquity and the Middle Ages:
19th century:
20th century:
21st century:
Here is a table summarising the historical trend in the price of gold over the last 10 years:
| Year | Average annual price (USD/ounce) | Annual change (%) |
|---|---|---|
| 2023 | 1 825 | -3.2% |
| 2022 | 1 883 | 5.7% |
| 2021 | 1 781 | -4.1% |
| 2020 | 1 853 | 25.1% |
| 2019 | 1 482 | -18.9% |
| 2018 | 1 839 | 1.3% |
| 2017 | 1 816 | 12.7% |
| 2016 | 1 609 | -11.9% |
| 2015 | 1 817 | 7.0% |
| 2014 | 1 700 | -2.9% |
Now that you have understood how to trade gold online through an internet broker or broker, you'll have to choose which platform you're going to use. This choice should be the subject of serious consideration and should not be made lightly. It's best to compare different points such as:
When you trade commodities like an ounce of gold through an online trading platform, the cost of your transaction is set by the broker and applied in the form of spreads. But what are these spreads really and how are they applied to your CFD trades? Here are some answers that will help you see more clearly and understand how much your operations are really costing you.
Whether it's trading commodities like gold through CFDs or Forex currency pairs, the spread has the same function and definition. The difference between the purchase price of gold at a given time and its sale price at the same time is commonly called "spread". For the trader, these are fees directly charged by the broker used on the transaction carried out.
To better understand, let's take a tangible example:
When you go to your online trading platform, you can see two values associated with the Gold CFD like:
Gold: Buy 1800.50 Sell 1800
You therefore calculate the spread by the difference between the purchase price and the sale price and you obtain a cost of 50 pips per unit. This means that if you bought an ounce of gold and resold it at the same time, you would lose 50 pips on the trade made. So you really should take this spread into account during your operations.
In plain English, it's fair to say the CFD spread is what represents all the costs associated with trading gold online.
The fees charged by other types of platforms where you can buy physical gold for example are different and are sometimes not expressed in this form. You need to always compare the different solutions available to you in order to choose the one that will best meet your expectations.
Here you'll find details on the types of investors who may be interested in the online gold market. It's important to know that trading gold by CFDs or another trading instrument is not an activity suitable for beginners. It is necessary to have a greater understanding and a good grasp of the gold market before embarking on an activity of this type.
Like all financial transactions, speculating in gold presents risks and, without being aware of these risks or without putting in place a real and thoughtful trading strategy, it is common to make mistakes that may result in the loss of some or all of the invested capital.
Among the elements that can present a significant risk, there's the leverage effect offered on gold by CFD brokers. This leverage makes it possible to increase the amount invested and therefore potentially the gains made, but it also increases the risk with the same importance.
When someone wants to take a position in the gold market, the most delicate question faced is knowing when the best time to buy gold is ...
For this, it's particularly necessary to look carefully at the monthly charts on gold. Some traders, for example, use the lowest average and wait for the gold price to get closer again, hoping that this signals an uptrend. With the charts, it is possible to set up two different strategies on the purchase of gold. You can wait for the price of gold to be at its lowest in order to buy it at the best price or wait for an uptrend to be well established and confirmed. This choice will largely depend on your trading horizon.
As mentioned above, the general economic climate is extremely influencing gold prices. When looking at the historical data of these prices, you notice that the price of the yellow metal tends to increase as the world economic situation deteriorates and if the other indicators are also convincing.
This phenomenon is due to the fact that private or institutional investors want to secure their deals and their investments in the event that other markets collapse. In this sense, other more psychological data may indicate a forthcoming rise in gold prices.
Ultimately, in order to get an idea of what the future of gold may be, you must pay particular attention to economic and financial news. The more this news is negative and made public, the more investors will be afraid and tend to withdraw from the markets. However, these investors will sometimes reinject their money in a more secure market, that of gold.
Another external indicator is to be favoured when you want to buy gold. This is of course the Dollar. Since gold is valued and therefore bought in dollars, wait until the EUR/USD parity is important in order to profit from gold at the best exchange rate. In addition, a general drop in the dollar against competing currencies is often conducive to mass investment leading to an appreciation in gold prices.
An analysis identifies the factors that influence the price of gold, such as supply and demand, inflation, interest rates, geopolitical events and economic changes. This understanding informs investment decisions and helps minimise risk. Analysis can identify strategic entry and exit points in the market. By following trends and identifying areas of support and resistance, investors can maximise their potential profits.
If you want to invest in the online gold price, you must do so during the opening hours of the markets and more specifically during the opening hours of the commodities market. It is possible to speculate on gold on the stock market every day between midnight and 11 p.m. on most CFD trading platforms on the market.
The relationship between gold and the dollar is simply due to the fact that an ounce of gold is quoted in US dollars. As a result, there is a so-called “negative” correlation between these two values in the market, which means that a strong dollar will often cause the price of gold to drop and vice versa. When the dollar is weak, it makes the purchase of gold more interesting for traders who execute their transactions with another currency but other elements must also be studied.
During the subprime mortgage crisis and previous financial crises, gold gained a lot of points because it is considered a safe haven. This is of course still the case today as we have seen with the Covid-19 pandemic which has seen the value of gold rise again while other financial and stock markets collapsed but this status remains to be assessed with caution.
