Speculate on the price of gold, what you need to know before you start

Gold is a commodity known to be very volatile on the Forex market. Some traders prefer not to trade it to avoid unpleasant surprises such as sudden and unexpected reversals of trends. Gold, as a commodity, is traded both as a Binary Option and as a CFD on Forex or as a Future.

The raw materials market

The raw materials market is a separate market. Gold, if indexed to the US Dollar, often reacts to changes in the US Dollar, but not always. Raw materials in general are affected by GDP figures. But since the trader’s know-how is a “nomadic” knowledge, there are a host of variants to be known from both observation and experience, and the rules do not always apply, or at least may change.

Indeed, will gold still trade efficiently? In the year 2000, the message would be more like the one from farmers who tell us: “You are 7 billion people, 10 billion in 30 years, and if you don’t invest in agriculture you will have problems”. We witnessed hunger riots in some parts of the world in 2008, and in August 2013, because of Syria, the price of gold went dramatically to the sale. This is what the trader must be broken into: dealing with reality.

gold trade

Speculation and gold

Today, the price of gold, like any other asset, depends more on speculation than on the quality of the raw material. Indeed, and this is especially true for gold and commodities, there is a phenomenon of amplitude: speculators are more numerous than physical markets (2/3 against 1/3), so they modify the market simply by speculating by involving much more money than what is really available on the market.

All this means that for the trader, gold can trade as a currency or index. The same rules apply and the indicators are identical. However, let us remember those that work best: Ichimoku, the harmonic forms and the news of the economic calendar. To find out the best gold trading hours, you can use the FH-Hot-Times indicator, applicable on an MT4 platform. You can also use a forex platform like eToro that offers interesting spreads in the market. In addition, you will be able to copy the best traders to ensure potentially more gains.

Conclusion: Trading in gold, a very volatile market, requires some attention because of all the variables that affect it. The trader will be well informed about the geopolitical situation, which undoubtedly affects the commodity market even more than currencies.