How to Trade Gold in Forex Broker

Posted in Forex Education

Gold has grown more popular over the last few years. Many traders prefer gold due to its consistency, it is less prone to dramatic changes in value compared to other currencies. For those who haven’t tried gold trading before, trading gold at a forex broker is a good way to start, you only need to spend a few hundred dollars to get started. This article will explain trading gold at a forex broker in greater detail.

Trading Gold

When you invest gold, you buy gold in its physical form – coins, nuggets, or bars. This method is not practical for trading as they don’t have the ability to sell short. Furthermore, gold coins do not directly reflect the value of gold.

Storing gold physically as an investment is likely to cause proof and storage problems in the future. In contrast to this, trading gold allows you to generate more frequent and bigger profits efficiently, even during fluctuations in the price of gold.

Gold and Forex

Gold is usually priced in US dollars, making it inversely correlated to the dollar to a great extent. When the weakening of the dollar against other currencies occurs, these currencies have more gold purchasing power (since gold is priced in dollars). Moreover, the demand for gold increases, which causes gold prices to rise to the point of reaching a temporary state of equilibrium.

How to Trade Gold in Forex Broker

How to Trade Gold in Forex BrokerTrading gold at a forex broker is fast, easy, and cost-effective. Almost all forex brokers offer gold trading as small as 10 ounces, even as low as 1 ounce in some cases. With max leverage on gold trading, it has become possible to trade gold, both short and long term, with a low deposit of $100 at forex brokers.

Recognize Gold Trends

Gold reacts to a limited number of price catalysts such as supply, demand, inflation, deflation, greed, and fear. In general, these factors cause changes in volume and trend intensities.

To help you understand better, here is an example: A selloff hits the world financial markets, gold taking off in a strong rally. Many traders believed that fear will carry the prices higher and decided to jump in.

However, inflation actually triggered the decline in stocks, attracting a more technical crowd that will aggressively sell against the gold rally. Combinations of these forces are always present in world markets, creating long-term uptrends and downtrends.

Understand the Crowd

Gold attracts diverse, opposing crowds. Gold bugs are found on top of the heap, collecting physical bullion and allocating outsized family assets to gold options, equities, and futures. They are long-term players who eventually shake out less competent players. In addition, gold bugs add significant liquidity because they provide an ongoing supply of buying interest at lower prices.

Read the Charts

Interested gold traders must learn the gold chart inside and out, starting with a history going back at least 100 years. Carving out trends caused the metal to trickle lower for incredibly long periods, denying profits to gold bugs.

Looking at gold’s recent history, it is evident that there is little movement until the 1970s. After the removal of the gold standard for the dollar, gold took off in a long uptrend, proven by rising inflation due to skyrocketing prices of crude oil. During the mid-1980s, it turned lower, at around $700.

This downtrend lasted into the late 1990s until gold entered the historic uptrend last February 2012 at $1,916 per ounce. A steady decline was experienced for the next four years, relinquishing around 700 points. As of March 2020, it’s trading stands at $1,618 per ounce.

Choose the Right Venue

Liquidity dictates gold trends, increasing when it’s moving sharply and decreasing during quiet periods. This swinging of rates impacts the future markets more than equity markets, due to lower participation rates.


Many traders prefer gold due to its consistency compared to other currencies. Dramatic changes in value are also less likely to happen. For those interested to try gold trading, a few hundred dollars are sufficient to get started in trading gold in forex brokers. Lastly, understanding the basics of gold trading is vital to increase the chances of achieving a successful, high-profit trade.