What are merits and demerits of trading Gold online?

Merits and Demerits of Gold Online Trading

The gold market is one of the oldest markets in the world. For centuries, gold has been regarded as a medium of exchange and a storage of wealth. Gold is widely regarded as a form of “anti-money” and a safe-haven asset. Therefore, it is one of the best trading tools for traders who want to hedge against potential weaknesses in stocks, bonds or major currencies.

Merits of trading Gold are:

• The unique feature of gold is that when the prices of other assets fall, the price of gold tends to fall.
• Traders can profit from rising and falling prices.
• Gold can be used to hedge other trading instruments.

Demerits of trading Gold are:

• Buying and selling physical gold is difficult in action-fortunately, with Deriv, you can trade gold CFDs, which is much easier.
• Gold does not provide cash flow dividends-so it may be a better trading tool than other investment tools.

There are many resources online to help you understand how to become a gold trader. However, the best way to learn is to open a real account or demo account and start paying attention to price trends and news in the gold market. Once you are ready, you can start trading.

Trade Gold on Deriv

Factors affecting the price of gold

The price of gold is affected by the perceived risk level of the global market, the value of the dollar, the demand for gold from the jewelry industry, and any factors that affect the gold mining industry. This makes the gold market very active.

The price of gold is usually quoted in U.S. dollars, which means that any factor that affects the exchange rate of the U.S. dollar will affect gold. Locally, gold is priced in Australian dollars, so the same factors apply when looking at the price of gold in Australian dollars.

Gold is used to make jewelry, and gold is used for wealth storage in many countries. The wedding season in India is a period of rising demand for gold.

When traders have risk aversion, the price of gold usually rises. This may be due to geopolitical issues, corporate bankruptcy, or concerns about inflation, interest rates, global economic growth, or stock valuations. When these concerns ease, gold prices usually fall.

Finally, as a gold trader, you need to understand the problems facing the gold mining industry. Each mine has an independent production cost per ounce of gold, and if the market price is lower than that cost, the mine will usually suspend operations. This reduces the overall supply of gold and ultimately leads to price increases.

Gold producers sometimes hedge the price of gold, which adds another momentum to the gold market.

See Gold Price Chart on Deriv

Know the Gold Price Trend

The price of gold rebounded from a low of nearly US$200 in 1999 to more than US$1,900 in 2011. The 12-year rise was supported by central bank purchases, the launch of gold ETFs, and concerns about US debt and the dollar.

The price of gold reached its peak in 2011, which coincided with the low point of a sharp adjustment in the global stock market. Since then, asset markets have shown historically low volatility, which has put pressure on gold prices.

As of 2018, the outlook for gold is mixed-although the outlook is uncertain, it is bound to bring trading opportunities. If the stock market continues to fluctuate, the price of gold may rise again. Rising interest rates or inflation may also cause the price of gold to rise again. If the global economy continues to grow and the stock market continues to rise, gold may fall further. Both situations will create opportunities for traders.

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