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5 Benefits of Trading in Gold

TABLE OF CONTENTS

5 Benefits of Trading in Gold

5 Benefits of Trading in Gold

Vantage Updated Updated Thu, 2024 January 18 03:56

Throughout history, gold has been valued by both traders and investors due to its ability to retain its value over time, hedging against inflation and leading to potential returns. In the context of our dynamic global economy, where financial instability and inflation can diminish wealth, gold trading emerges as a stable alternative. It not only serves as a safeguard against financial turmoil but also retains its status as a scarce and globally appealing asset in investment portfolios.

If you’re looking at trading this leading precious metal, here are five benefits of trading gold.

What is Gold Trading

Gold trading involves the buying and selling of gold as a commodity. While gold can be traded physically, such as in the form of bars and coins, the majority of trading takes place digitally in today’s world. With the modernization of our world, digital platforms have emerged, enabling traders to seize trading opportunities on gold prices without needing to possess the physical metal.

While physical gold still holds immense value and appeal, the digital age has brought forth instruments like Gold ETFs, futures contracts, and options. 

These instruments, derived from the price of gold, offer traders the flexibility to take advantage of price fluctuations without the logistical concerns of storing and insuring the metal. Additionally, gold trading is also favoured by many due to its intrinsic value and the hedge it offers against inflation and currency fluctuations [1]

Gold CFD trading

Gold Contract for Difference (CFD) trading represents a dynamic aspect of gold trading that allows you to go both long or short. 

A CFD is essentially a contract between a trader and a broker to exchange the difference in the value of an underlying asset (in this case, gold) between the start and end of the contract. This type of trading allows traders to seize trading opportunities on price movements without needing to own the underlying asset (gold).

Traders using CFDs also have the flexibility to potentially profit from both rising and falling markets, depending on the positions they choose to open. Traders can choose to go long (buy) if they believe the price of the asset will increase or go short (sell) when they anticipate the price of the asset to decline. 

However, it’s vital to remember that with the potential for higher returns comes higher risk, especially if you’re trading with leverage. Thus, it’s essential to be well-informed and do your own due diligence before diving into gold CFD trading.

Ready to trade Gold CFD (XAU/USD)? Open a live account with Vantage today and experience trading the real financial markets.

5 Benefits of Online Gold Trading

1. Liquidity

Online gold trading come with high liquidity. This implies that the gold market is consistently bustling with activity, ensuring that traders can swiftly enter or exit their trade positions. The global demand for gold ensures that there’s always someone willing to buy or sell, making it one of the most liquid markets in the world [2].

With such high liquidity, it opens up trading opportunities due to these constant market movements. Additionally, this constant activity provides traders with greater flexibility — they can easily adjust their trading strategies based on market movements, ensuring they’re always in the best position to react to new information or sudden market changes.

2. Portfolio Diversification

During times of economic uncertainties, gold is often seen as a safe haven for traders and investors because it holds its value well. It also exhibits a low correlation with other asset classes such as stocks and bonds, which means its price movements are not closely linked to those of other products. 

Including gold in your portfolio can act as a safety net against unpredictable market conditions. Its value often moves inversely to traditional stocks, offering a protective hedge during economic downturns.

3. Protection Against Inflation

Gold has traditionally maintained its value, especially when fiat currencies exhibit signs of decline. As the cost-of-living rises, the value of gold often follows suit, positioning it as a reliable safeguard against inflation. When the purchasing power of paper money diminishes due to various economic challenges, gold remains steadfast. This makes it a dependable means to preserve an investor’s portfolio value.

Gold-Price-in-Ounces-USD-over-10-years-1

Image 1: Gold Price in Ounces USD over 10 years [Source: TradingView]

Furthermore, in the face of an unpredictable global economic landscape, many traders and investors gravitate towards gold. Gold’s stability becomes even more pronounced in unpredictable global economic conditions, where it stands out as a safety net amidst uncertainties. Unlike fiat currencies, which can be printed and consequently devalued, gold, being a tangible asset, boasts inherent scarcity and enduring value.

4. Automated Trading

As digitalisation and technology have advanced, online trading has evolved correspondingly. Traders can now automate their trading process by utilising software algorithms and systems to execute trades. This allows traders to potentially capitalise on market movements 24/7, even when they aren’t in front of their devices. 

The integration of machine learning and AI technologies into these systems means that they can learn from market patterns over time and adapt their strategies. This further enhances the potential for success in gold trading. Automated process is only available to online gold trading and when a trader trades physical gold, this automated process is usually not available.

Additionally, traders can also take advantage of the utilisation of stop-loss and take-profit functions available to online gold trading. However, while the benefits of automated trading are significant, it’s essential to remember that no system is foolproof. Traders must stay informed, monitor their systems, and occasionally intervene to ensure seamless operation.

5. Accessibility and Convenience

In today’s digital age, gold trading has become much more accessible, and instantaneous. Online platforms and brokers, like Vantage, allow traders to explore gold CFDs. This provides traders with quick and convenient access to the vibrant gold market, all from your computer or mobile device.

In addition, online platforms also offer user-friendly tools, live charts, and many other features to further help traders simplify their trading experience. Whether you’re new to trading or experienced, these platforms make gold trading as simple as a click, ensuring easy access and convenience. 

For beginners, visit the Vantage Academy to learn all about the different trading strategies and terminologies to kickstart your journey in gold CFD trading.

Why Trade Gold CFDs with Vantage?

Vantage is a global, multi-asset CFD broker that offers clients access to a nimble and powerful service for gold CFD trading. With cutting-edge platforms, robust security measures, and unparalleled market insights, trading with Vantage ensures traders are equipped with the tools needed to trade efficiently.

Vantage also has some of the lowest spreads and trading fees in the industry, making online gold trading ever more attractive. 

We also offer free educational resources to help traders build their trading knowledge. These resources include free articles, interactive courses, and webinars that cover everything from how the markets work to complicated technical trading strategies. 

Moreover, the Vantage support team is available round the clock, 24 hours a day, 7 days a week, to assist traders, ensuring that you are never left in the dark.

Key takeaways for Benefits of Online Gold Trading

Online gold trading, with its array of benefits, is undoubtedly an appealing venture for traders and investors. From the remarkable liquidity of the gold market to its protective hedge against economic downturns, the benefits are evident. 

Gold not only brings diversity to investment portfolios but also serves as a resilient guard against inflation.

Moreover, thanks to the rise of online platforms, trading gold has never been more within reach. Resources, real-time data, and expert insights are now readily available to every trader, ensuring they are well-equipped to get started on their trading journey.

Ready to get started with gold CFD trading? Open a live account with Vantage today and experience one of the most intuitive platforms with the best user experiences for traders. 

References

  1. “How Gold Affects Currencies – Investopedia”. https://www.investopedia.com/articles/forex/11/golds-effect-currencies.asp . Accessed 21 Aug 2023.
  2. “Why gold is a liquid asset (and what that means for investors) – MoneyWatch”. https://www.cbsnews.com/news/why-gold-is-liquid-asset-what-that-means-for-investors/ . Accessed 21 Aug 2023.
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