Thanks to its constant liquidity – the fact investors will always want to trade it – gold has been at the core of global financial systems for millennia.
No war or natural disaster has ever been able to take away gold’s shine. In times of political crisis or economic uncertainty, investors usually turn to gold as their primary safe-haven asset, in order to preserve their capital. And while physically owning significant quantities of gold could cause you a few headaches in terms of transportation and storage, online gold trading, with the help of a reputable online trading broker, such as UFX.com, could represent a golden opportunity you simply can’t afford to pass up.
To help you in capitalizing on the global gold trading market, we’ve brought together some of the best gold trading tips in the business.
When it comes to precious metal trading, the size of your investment often depends on whether you are focusing on short-term or long-term deals. In the case of short-term positions, the risk tends to be higher, limiting the size of many investors’ trades, although during times of exceptional uncertainty and market volatility, day trading on gold can deliver more than decent profit returns.
Seasonal cycles are well worth paying close attention to, such as the times of the year leading up to Asia’s Lunar New Year and the Indian festival of Diwali. The price per ounce usually increases in line with demand for gold jewelry, usually given as gifts. It’s important to remember these events are not the only factors affecting gold prices, and there are plenty of others you’ll need to consider when trading gold.
To stay abreast the trends defining the international gold trading market, you should keep tabs on the more important market events. An economic report showing the performance of a particular sector or the level of confidence in a certain country can have a major impact on gold prices. Results that come in below expectations will often push anxious investors towards gold, driving the price up.
Smart traders should also get to grips with technical indicators for analyzing price movements and trading patterns. One very important technical indicator many traders benefit from is the Relative Strength Index (RSI). Many investors have found the RSI indicator to be invaluable in gold, silver, and platinum trading, because it helps identify when the market is either overbought, oversold, or is heading for a major correction. Those polarizing market conditions are, of course, the times when traders stand to make the most money.
Overall, the most important aspect of gold trading is its ability to help you maintain a clear overview of the global economy, including exchange, interest, and inflation rates, as well as gold-to-silver and gold-to-bonds ratios. As the original premium asset, gold can be one of the most exciting markets you can trade in, primarily due to its constant liquidity and profitability.