Gold is an alternative investment that is often overlooked by UK traders. Partly this is because of the high relative price and the fact that it is quoted in US dollars. Fortunately, this guide will provide all the information you need to get started in gold trading, covering the basics of price charts and technical analysis, to understanding news events and developing a winning strategy. This tutorial also explains how to compare the top gold brokers, online platforms and trading apps, alongside the best vehicles for short-term trading and longer-term investing.
Best Gold Brokers
AvaTrade is a leading forex and CFD broker, established in 2006 and regulated across 9 jurisdictions. Over 400,000 users have signed up with the broker which processes over 2 million trades each month. The firm offers multiple trading platforms, including MT4, MT5, and a proprietary WebTrader. 1250+ financial instruments are available for trading, alongside a comprehensive education center and multilingual customer support.
Demo Account Regulated By MT4 Integration Yes ASIC, CySEC, FSCA, ISA, CBol, FSA, FRSA Yes Min. Deposit Min. Trade Leverage $100 0.01 Lots 1:30 (Retail) 1:400 (Pro)
XTB is one of the largest stock exchange-listed forex and CFD brokers in the world, offering access to over 5800 trading markets on their xStation platform. They boast 700,000 active traders, 20 years experience and authorization from tier-one regulators, including the UK's FCA.
Demo Account Regulated By MT4 Integration Yes FCA, CySEC, IFSC, KNF, DFSA No Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30
Eightcap have a global presence and are FCA regulated. They boast low trading fees and are the highest rated brand by TradingView users - and users can trade directly from TradingView. New traders can also sign up for a live account in just a few minutes.
Demo Account Regulated By MT4 Integration Yes FCA, ASIC, CySEC, SCB No Min. Deposit Min. Trade Leverage $100 0.01 Lots 1:30
Gold Trading – The Basics
Humans have been mining, trading and crafting gold since time immemorial, making this precious metal synonymous with wealth and luxury.
Gold has powered the global economy for centuries and was the motivator for major historic events such as the Californian Gold Rush, colonial ventures in South Africa and elsewhere, and the introduction of a 100-year ‘gold standard’ monetary system starting in 1834.
To illustrate this precious metal’s enduring importance and rarity, 65% of the world’s entire gold supply has been mined since 1950, and a hefty chunk of that is held as a reserve at state facilities such as the famous Fort Knox in Kentucky, USA. This is testament to gold’s continuing importance as a store of value.
Chart-watching traders may also be impressed by gold’s performance in the last two decades – its value has quintupled since 2001.
Trading Vs Investing
While gold is no longer quite as central to the economic system nor as commonly minted by central banks as currency today, it remains one of the most important commodities in the trading world.
As with other commodities, many traders will look to profit from longer-term price movements with gold. However, thanks to gold’s sustained importance and popularity, it also experiences more short-term volatility than comparable commodities.
Today, forex is the primary market where investors trade and swap gold in real time. In forex trading, gold works essentially as a currency with an exchange rate to other currencies and some commodities. The price of gold is stated per troy ounce (about 31.1 grams).
With a good broker, online traders in the UK can view real-time price charts to check the metal’s performance against a range of currencies and place trades with various financial products such as CFDs.
- Gold futures, in which the trader and a counterparty make a contract to trade gold at an agreed price at a certain date in the future, are one of the most popular ways to trade gold.
- Gold options, which give the trader the right but not the obligation to make the trade when the contract expires, are also popular and can protect traders from risk, to a degree.
Finally, gold has never lost its appeal as a store of value, and still makes a quintessential part of an investment portfolio, often as a hedge against wider market volatility. Investors who want to gain exposure to gold can either:
- Buy directly in the form of bullion or coinage from an online dealer, bank or broker
- Buy ETFs or long-term funds that invest in gold
- Buy and hold shares in gold mining companies
More detail, including the pros and cons of these trading and investing vehicles, is provided further below.
Gold Price Chart
How To Start Trading Gold
If you want to start trading gold online, these are the key steps that will help you get a running start and avoid wasting time and money:
- Decide on the timeframe you want to trade
- Decide which financial product/s you want to trade
- Choose a reputable, recommended broker
A wide range of financial products and gold brokers are available for budding traders, but before you decide on which to go for you need to decide which timeframe you prefer for your trades:
- Short-term gold trades are often the realm of day traders and are typically opened and closed in the course of a trading day. Some of these gold positions can last for minutes or even seconds, while others may take hours or could remain open overnight. Strong technical analysis is often a must.
- Medium-term gold trades might remain open for days or weeks, and may aim to take advantage of upcoming events and news announcements, such as rising inflation.
- Long-term gold trades of months or even longer are more suited to those who want to trade positions/trends with strong fundamental analysis, taking into account economic growth both in the UK and globally.
Choosing A Gold Trading Product
Here are more details on the main financial products used to trade gold:
- CFDs, or contracts for difference, are an agreement between a trader and counterparty in which one side will pay the other the difference in price between the open and close of trade. One popular aspect of gold CFDs is that they allow leverage, which can greatly boost the trading power of a small amount of capital, making shorter-term trades viable, but also magnifying risk. UK traders can find CFDs on gold, gold/currency pairs, gold options and gold ETFs from forex and other brokers with up to 1:30 leverage.
- Futures are the classic derivative product for gold trading and are still among the most popular. By their nature futures contracts are more suited to longer-term trades. They are used for various purposes including speculative trading or as a hedge against inflation, and tend to require high amounts of capital to invest.
- Options work in a similar way to futures, but in this case, the contract buyer is not obliged to purchase the gold when the contract expires. Instead, they pay a premium, typically 5–10% of the total value of the contract – this gives the trader the ‘option’ not to execute the trade on contract expiry, protecting them from significant losses.
- Spread betting is a popular derivative product that allows traders to speculate on the value of an underlying asset without owning it – instead, they bet on whether the price will rise or fall. Spread betting is suitable for a wide range of timeframes starting from a day, and traders can use leverage. A significant advantage for UK gold traders is that profits from spread betting are usually tax-free.
- Binary options are another way for UK retail traders to speculate on gold as they are straightforward, have capped potential risk and a predetermined profit level regardless of the extent of price movements. Gold binary options will generally be traded as a currency pair, and are suitable for a range of timeframes but are most commonly used in short-term trades.
- Stocks allow investors to take a view on the price of gold by buying shares of companies that mine gold. Often these companies will mine other metals and minerals also, so this isn’t a pure play on the price of gold. Investors should also note that other factors, such as employment costs, and taxes, will affect the share price of such companies as well as the price of gold. One of the attractions of investing in the shares of gold mining companies is that they often trade at a large discount to the relative price of gold. Shares can be bought through a broker or online trading facility.
- ETFs offer investors a way to trade with the simplicity of buying shares, but the advantage of a direct investment in gold. They are flexible, bought and sold through a broker or online trading facility just like company shares, and can be based on gold itself, or mining companies, and can be used to speculate on the price of gold or hedge against an existing position.
Choose A Broker
Many online brokers provide UK traders with access to gold markets. Some of the most important factors to consider when choosing between gold trading firms are:
- Instruments – Whether you want to trade gold CFDs, futures, or binary options, you will need a broker that provides the right instrument with competitive trading conditions.
- Regulation – Client safety is key, so traders should look for gold brokers that are regulated by the FCA or another reputable regulator, such as the CySEC.
- Trading Platform – Traders need a reliable and responsive platform to ensure they can plan and execute gold trades efficiently. Many traders prefer dedicated platforms such as TradingView, or MetaTrader’s MT4 or MT5. Some gold brokers also provide proprietary platforms. Choose a trading software which provides real-time charts with options to add indicators and other analysis tools.
- Mobile App – If your daily routine keeps you on the road, you will need a gold broker with a good mobile app. The best gold trading brokers offer seamless integration between desktop platforms and mobile applications for a hassle-free investing experience.
- Fees – Gold trading brokers often charge a commission per trade, but they may also charge fees for account maintenance, withdrawals and other services. UK-based trading brokers will usually charge a spread on gold trades – spreads can be around 0.5 pips or even lower.
- Demo Accounts – Beginners may want to look for a gold broker that allows them to make paper trades on a demo account so they can practice their strategy and hone their online trading skills. They can then switch to a live gold trading account when they feel ready.
- Extras – Some gold brokers offer optional extras, such as market analysis, educational materials, signals and copy trading. These can help UK traders get ahead in the gold trading market.
There is no one best gold trading strategy, but traders who make an effort to learn about market dynamics, spend time on analysis and practice reading charts can develop a profitable system.
A key thing to note is that gold is effectively traded as a currency on forex markets, with the currency code XAU. You can search XAU/USD, XAU/GBP, XAU/EUR and so on to track the price of gold today on real-time trading charts.
Here are a few more important factors that move gold markets:
- Market Strength – Since gold is often used for hedging or as a store of value, gold prices will often rise during times of market weakness as people look to protect their capital from the downturn. When markets are strong, gold prices may fall.
- Inflation – Periods of high inflation tend to drive gold prices higher for similar reasons.
- Supply and Demand – Gold demand is driven both by speculative markets and by sectors like jewellery-making that use the precious metal as a raw material. If demand for jewellery or industrial uses of gold rise, so will gold prices. Likewise, when the gold supply falls, prices will rise – as in the COVID-19 pandemic, when shutdowns affected many gold mines across the world. See below for more detail on gold supply and demand.
- Currency Movements – Gold prices are affected by currency price movements. This is particularly true of the US dollar, which has an inverse relationship with gold – when the USD rises, gold tends to fall. On the other hand, gold has a positive correlation with the Australian dollar (AUD), since Australia is one of the world’s top gold producers. Gold and AUD price movements often go hand-in-hand.
- Geopolitics – To stay abreast of developments that might affect gold markets, keep an eye on current events around the world, particularly in major gold-producing countries, such as China, Australia, Russia and the United States. You should also keep an eye on countries with a large demand for gold jewellery, including Singapore, India, China, and Malaysia.
Supply & Demand
The value of any product, including financial instruments and investments, is determined by its demand and supply. Some would argue that outside factors, such as war, for example, affect the price of commodities, but this is because of the effect that such news may have on the flow of supply and demand.
Demand for gold as measured by the World Gold Council falls into three main categories. First, there is jewellery, still the largest sector and using over half of the world’s gold supply. Over the last few years, however, gold demand for investment purposes has been growing, to the point at which it now constitutes about a third of global demand. At a figure of around 12% comes the demand for gold as a product in technology and industry.
The demand for gold from consumers has risen in Asia. As the economies of China and India have grown, so too has the spending power of their people. Together with the Middle East, the region accounted for 65% of consumer gold demand through 2011.
Gold For Jewellery
The demand for gold for jewellery is consistently above half of all gold demand. Whilst such demand is hit by economic downturn – fewer jobs or lower wage settlements mean less money to spend on luxury items – the world’s largest buyer of gold for jewellery is less affected by such concerns. Consumer demand in India is determined by its cultural and religious background, rather than by cost considerations.
Though affordability and desirability drive demand for jewellery, particularly in the West, the markets of China and India are likely to see growth for some time.
Investment in gold has been growing since 2003. The world has been hit by several financial crises during this time, and each has served to highlight the reasons to invest in gold as a store of value and a diversifying factor that helps to insure investment portfolios against risk.
There are also many ways to invest in gold, and the growth in instruments such as ETFs and retail-sized gold bullion products has helped to make such investments more accessible to the private individual investor.
This combination of factors has seen gold increase in acceptability as an investment asset, with the price consequently increasing sixfold from 2000.
Gold As A Technological Material
Gold has properties that make it an essential component in the production of many of today’s electronic, medical, dental, and industrial applications.
Being highly resistant to corrosion and an exceptional electrical conductor, it is used widely where small conducting or connecting components are required. Gold is widely used in medicine because it is an antibacterial material. It is also used in some cancer treatments, and as a filling material in dentistry.
Often overlooked is its importance in the aerospace industry, including space exploration where it is also used as a reflective coating material.
If asked about gold trading supply, and where gold comes from, most people would immediately say mining. In truth, though, this is only half the story. Well, just over half, because the supply of recycled gold has been increasing to meet increasing demand.
Gold From Mining
Mined gold averaged about 2,600 tonnes per year in the early 21st century. New mines are opened to replace old mines, so real new production has been minimal.
Around the world there are hundreds of gold mines, with African and Australian mining, in particular, being large contributors to those countries’ economies.
The final process in the production of gold is refining, and so gold refineries are often located near large gold mining areas. However, before getting to the refining stage, a gold producer has to go through a time-consuming cycle from exploration and discovery to mine excavation and removal of the gold. This cycle has an average span of ten years, meaning that gold production cannot just be ‘turned on’ like a tap.
This means that the mining of gold is an inelastic industry, and is unable to meet surges in demand. When such surges occur, supply is found elsewhere, and is prompted by price.
As gold increases in value, the worth of scrap gold – old jewellery etc. – increases. Individuals react strongly to a strong gold price, particularly when the economy is faltering and extra cash is required to service debts or even everyday life. The supply of gold from recycling has become a big business with many shops willing to buy gold appearing in almost every town and city in the Western world. This ease of recycling has further increased the supply.
Recycling of gold is very elastic, able to increase at a pace not possible from the mining of gold, and on a global scale now accounts for over a third of all gold supply.
Gold Sales By Governments & Central Banks
For decades the world relied on currencies being pegged to the dollar by use of the Gold Standard. Governments built up reserves of gold, and used sales to help control individual economies. However, after the gold standard was abandoned, many governments began to sell their gold. In fact, for two decades from the late 1980s through to 2009, sales by governments increased the global gold supply.
Since 2009, European central banks have become averse to selling gold, preferring to keep it as the Euro debt crisis comes to a head, and buying of gold by emerging economies has increased. This has combined to mean that central banks are now net buyers of gold rather than net sellers.
What Affects The Price Of Gold?
Just like any commodity, the price of gold trading moves up and down. In the main, this price action is caused by supply and demand. However, it is by understanding the drivers of this supply and demand that will better select opportunities to buy and sell the yellow metal.
Being a natural resource, gold is in finite supply. At some stage, the world will have exhausted its reserves of gold. Before that happens, however, gold mining companies will have mined deeper and harder, at more expense, than previously. They will only be able to do this if the price of gold rises to levels that make such efforts economically viable. So extracting the world’s gold from the world’s crust will require higher prices.
Gold is traditionally seen as an ornamental metal, used for the manufacture of jewellery. However, of greater importance is the demand from Central Banks, which buy gold to keep as reserves and underpin a country’s currency or wealth, and from investment houses that buy gold on behalf of institutional and private clients.
The Economy Helps To Dictate The Gold Price
The state of the global economy causes Central Banks and investors to buy or sell gold. Times of recession and growth present gold investors with reasons to buy or sell gold.
As outlined above, gold tends to rise when inflation is high. This is because real interest rates (interest rates – inflation rate) may be negative. If this is the case, then the value of money depreciates. Gold, because of its very nature as a precious metal and natural resource, is seen as a store of value particularly when inflation is high.
When interest rates are high, investors will receive more interest on their cash deposits. In such an environment, equity investors might see companies raise dividends to attract investment. Gold bears no interest. So when interest rates rise, the price of gold may fall. Interest rates are often increased or decreased in response to wider economic concerns.
As the economy grows, general demand for goods picks up and inflation may rise. Whilst this is good news for gold traders, if interest rates rise because of higher inflation then this may dampen the gold price.
Economic Contraction (Recession)
During a recession, demand for gold trading generally falls. Fewer people buy jewellery, and industrial use retreats. Demand falls. However, to combat an ailing economy, Central Banks will often decrease interest rates and increase the supply of money (perhaps through exercises such as quantitative easing). Such monetary measures are seen as inflationary, which will increase demand for investment gold as a hedge against inflation.
Commodity prices react to the political climate. For example, were the Middle East to erupt into turmoil, or perhaps even war, oil supply lines may be disrupted and the price of oil increase accordingly.
It’s a similar story with gold trading. Political tensions that increase economic worries, or perhaps lead to the fear of war, tend to force the gold price upwards. Gold is seen as a store of value against the fluctuations in currency rates that political problems may promote. This is a major reason why Central Banks own gold as part of their reserves.
When you look to assess the price of gold now, and where it may move in the future, the overriding factor will be supply versus demand. However, there are many reasons why the demand for gold will increase and decrease. A lot of these reasons are interconnected, and it is possible for a two-way pull on the gold price to be caused by, say, a flailing economy (decreasing demand for gold) coupled with falling interest rates (increasing the investment value of gold).
Also, because gold is quoted in US dollars, comparative currency strength will impact the price of gold.
It is all these factors taken together that drive the price of gold, as well as add in price volatility with investors banking on rising and falling markets.
Guide For Beginners
Our editors and in-house staff have written a number of useful guides and articles for first-time gold traders and buyers. Take a look at some of them here:
Comparing Gold Dealers
For longer-term investors, buying gold bullion has never been easier, and this ease of purchase is predominantly because of the internet. Now at the click of a mouse button, you can be the owner of almost any amount of gold. Your gold can either be delivered to your home, or stored by the dealer in their vault.
For those looking to make such an investment for the first time, purchasing gold online can be a daunting prospect. There are many online gold dealers, and each has its own trading system and set of services offered. But in general, they operate in the same way. Some online dealers will store the gold that you buy for you, negating the necessity to have your own storage facility and saving you the cost of storage. However, we will concentrate on the dealers that offer ownership of physical gold.
Just like stock brokers, gold dealers offer different services to their clients. Some might offer research or technical price analysis, others an ‘execution only’ facility. Some will trade in bullion and coins, whilst others concentrate on one or the other. There are online dealers that offer an array of different products, and others have a limited catalogue from which to choose. Some dealers will deal in different currencies, others only in dollars.
Best UK Gold Dealers:
- Bullion Vault Review (Physical Gold Stored in their Vaults)
- Gold Made Simple Review (Gold Bars, Coins, Funds and Investment Plans)
- The London Mint Office Review (Gold Coins and Numismatics)
Physical Gold Vaults
Tips For Picking & Using A Gold Dealer
Consider the price at which the dealer sells gold. All dealers will add a premium to the cash price of gold traded on the metals markets. A dealer with high overheads will need to charge a higher premium, and this will impact your investment profit.
Once you have found a dealer that offers the products you want at a price you like, then you will need to open an account before making your purchase. Many online dealers have online verification checks that mean you can open your account in a matter of minutes.
Most online dealers have a ‘point and click’ system. You choose your product, select the size that you want to deal, and click the purchase button. Providing your account or credit/ debit card has an appropriate balance, your order will be filled.
If you are using a dealer that delivers your physical gold, the gold that you have bought will be mailed to the postal address that you gave upon opening your account, using either a courier delivery service or a registered postal service. This postage cost will be added to the cost of your gold at the point of sale.
Beware of costs – the beauty of buying online is that you usually save money by doing so. Products are cheaper online, and that includes gold. However, just like certain airlines, some online brokers make their gold look cheaper only to add on extra charges at the end of the order process. You should be wary of such unscrupulous practices, as fees such as shipping charges, handling and administration expenses, card processing fees, etc can push up the price of your purchase by quite some amount.
Whoever you choose to buy gold through online, ensuring that you conduct due diligence and pick a reputable company will ensure that your online gold buying experience is as good as any you’ll find on the high street, the only disadvantage being that you won’t be able to see and feel your gold before you part with your cash.
Reasons To Hold Gold In Your Portfolio
As well as diversifying your investments, gold is a great store of value. When inflation is higher than the interest rate you can get on your cash in a bank, your money loses purchasing power over time. In other words, it loses value. Gold is used by Central Banks and Institutional investors to keep the value of their money. Gold is also a finite resource and as such, whilst the short-term price might fluctuate, the long-term price is likely to trend higher (just like oil).
To the frustration of money market investors, today’s low growth environment significantly dampens returns on equities. For this reason, many are turning to alternative asset classes to combat record-low interest rates and soaring rates of inflation. Amongst these alternative investments, gold has long been heralded as a star performer.
Because gold behaves very differently from equities, it has a strong track record as a long-term hedge against inflation. Like all finite resources produced in small quantities, gold will always find a willing buyer. In fact, when investors jaded with the stock exchange scramble to acquire real assets (i.e. tangible entities with intrinsic value), the value of gold is driven even higher. Little surprise, then, that in recent years we have seen a wave of gold-buying companies hoping to cash in on broken and unwanted jewellery.
Diversifying With Gold Trading
A case study by DGC Asset Management showed that a £100,000 portfolio exposed only to developed market (DM) equities, equally weighted between the FTSE All Share Index and S&P 500 Index, delivered a nominal compound annual growth rate (CAGR) of just 0.2% between 2000 and 2013. When the portfolio value is adjusted for inflation, this actually tips over into a real annual loss of -2.7%, or a loss of £29,896.78 (29.9%) in real terms.
Fortunately for traders, research shows a direct correlation between gold investment and the overall performance of a portfolio. In the case study above, diversifying an equity portfolio by as little as 20% in gold bullion was enough to beat inflation and deliver a modest return of 0.4%, or £4,924.93 in real terms.
At a weighting of 30% gold bullion to 70% equities, the portfolio delivered a nominal annual growth of 4.9%, and a real return of 1.9%. This portfolio would now be worth around 81% more in real terms (inflation-adjusted) than the straight equity portfolio.
The trend we are seeing with gold is mirrored across other real asset classes. A recent report on real assets showed that, over the past decade, investments in UK Farmland have returned 10%, UK Forestry 10.4% and Fine Wine 11.7%, each outpacing FTSE 100, which trailed behind with returns of 0.7%. Nevertheless, these real asset classes could not compete with gold returns of 18.7% over the same period.
Overall, research suggests that diversifying with gold allows you to fortify your portfolio against tough investment conditions. An investment of just 20% gold is enough to nudge losses into returns.
Other benefits of trading gold include:
- Large range of gold brokers, trading platforms and financial products to choose from
- Leverage allows you to greatly boost your trading power – with 1:20 leverage, you only need to deposit £50 margin to open a £1,000 position
- High liquidity in gold markets ensures you can easily place and fill orders, also helping to keep fees down
- Trading gold can be an effective way to hedge against market downturns
Dangers Of Trading Gold
- Volatility can add to the risk of losses
- May require a high amount of capital depending on the trading vehicle
- Many factors involved in gold price movements make fundamental analysis relatively complex
- For UK investors used to dealing in Sterling, there can be the risk and cost of trading in a foreign currency
The History Of Gold Prices
Throughout time, gold has been used for a variety of purposes but predominantly as a decorative metal, currency, or investment asset. It is as the latter two that we usually understand gold to have a monetary value, but perhaps we should consider further ways of establishing the price of gold through history.
The oldest examples of gold use are not currency or coins, but rather as items of decorative importance. Even as far back as the Mesopotamians (modern-day Iraq and Iran) and ancient Egyptians, the metal was revered for its rarity and beauty, and used in the manufacture of personal jewellery, bracelets, and headwear, that set a[part the haves from the have-nots. Indeed, its perception as something magical, perhaps even spiritual, is evidenced by its use in the pyramids and as an item that would aid the passage to the afterlife.
The Egyptians did produce some gold coins – particularly in the period of 2700 BC to 2300 BC – but it wasn’t until around 550 BC that King Croesus of Lydia (now Turkey) minted the first known gold coins in numbers. These coins became the first global standard currency, being accepted in exchange for goods and services.
However, the use of gold in a monetary sense remained patchy until the early 19th century. With Britain extending its Empire, it adopted a gold standard to make payment for goods from its dominions more easily calculated and conducted. The success of this led to other countries basing their currencies on gold, but the most important basis was set in 1900 when the United States legislated through Congress for the Dollar to be formally pegged to the value of gold. By the outbreak of World War I, most other leading industrial nations had followed suit.
What this meant was that paper money, from any participating country, could be exchanged for a set amount of gold at any time with the central bank that issued the money. This wasn’t just a convenience: it was predicated by economic theory. Currencies were effectively fixed against each other and pegged ultimately against the US Dollar. If trade balances became skewed between nations, the deficit nation was forced to sell enough of its gold to cover the deficit. This would take money out of its economy and force prices down, while the extra gold into the surplus country would expand the money supply and push prices up. This would lead to a rebalancing of trade between the two countries.
Around 1900, the official gold price was $20.67 per ounce. With UK Sterling pegged against this value, the pound was valued at around $4.90. However, economic policy decisions began to involve interest rates more freely. Rather than buy and sell gold to rebalance supply and demand, interest rates would be adjusted accordingly. For example, the UK might raise interest rates, making Sterling more attractive and sucking in capital, whilst at the same time having a deflationary effect.
This situation remained in force for many years, but was largely suspended through the First World War, meaning that the US Dollar floated in value against other currencies whilst remaining pegged to gold. It was the post-war period that really set the US Dollar as the strong currency it is seen as today. While other currencies moved sharply as economies recovered, many devaluing sharply against the Dollar, the United States stuck with its gold standard.
The UK signed up to the gold standard in the mid-1920s, and then abandoned it in 1931 as the world economy reversed into depression. In 1933, President Roosevelt banned US citizens from buying, selling, or owning gold, as a precursor to devaluing the dollar on the gold standard in 1934. Gold moved from $20.67, where it had been priced for nearly 50 years, to $35 per ounce overnight.
In 1971, with America’s economic standing in the world weakening, President Nixon abandoned the gold standard completely. This allowed the dollar to float freely against other currencies, and meant that legislators in the United States could use policy more freely to steer its economy. The dollar devalued, and the American economy grew rapidly again (a contributory factor in the oil price crisis of 1973/ 4).
With the peg against the dollar gone, gold rose rapidly against the dollar. In 1971, gold had been priced at $35 per ounce. By 1973, its value had risen to nearly $200 per ounce. Its peak, however, came in 1980 when it hit a record $850, buying encouraged by the Soviet invasion of Afghanistan, a revolution in Iran, and a Cold War that was threatening to fall to freezing point.
However, the price of gold fell away from this time as the world became a more stable place and the Cold War ended with the bringing down of the Berlin Wall in 1990. By 2002, gold had fallen to below $300 per ounce.
Since this time, however, gold has been in almost constant demand with buying encouraged by one global financial crisis after another. While major equity markets have virtually remained unchanged through this time gold has risen six-fold, hitting a new all-time nominal peak of $1920 in September 2011.
Throughout history, gold has had value. It was valued so highly in ancient times that it was used to help transport the spirits of dead Pharaohs into the afterlife. The Mesopotamians first realised its value as a method of exchange for goods and services on a large and standard basis. Britain used gold to ease its international trade and help the growth of its Empire. The United States stayed true to the gold standard and manipulated it to become the economic powerhouse of the world. And now? China is now the world’s largest buyer of gold, and is rapidly increasing in economic importance; some would say it is already the world’s most important economy.
History shows us that there is real value in gold, and economies benefit from using gold, and the gold price, to their advantage.
There are no specific trading hours for gold – rather, opening hours will depend on the market and the broker you are trading with. On forex markets, gold is treated as any other currency and will be available to trade 24 hours a day.
However, bear in mind that trading volumes will rise and fall according to the trading hours of major markets – particularly London, New York and Chicago. At the same time, some online brokers will set specific hours for trading gold.
Note, the London fixing price, conducted at 10:30 am and 3 pm London time, is the official price at which the world bases its gold contracts and is used by high street dealers and online dealers alike.
Bottom Line On Trading Gold
For many people, gold’s symbolic value as a marker of wealth in itself makes this precious metal an attractive asset to trade, and there are many significant advantages to be found in the gold market. A great many brokers in the UK also facilitate gold trading through a range of products, meaning traders have the flexibility to choose their desired financial product, broker and trading platform. At the same time, gold markets are influenced by many complex factors, and it could be difficult for beginner or casual traders to keep abreast of all of these.
Use our ranking of the top gold brokers in 2023 to start trading today.
Can You Make Money Trading Gold?
A great many traders around the world have made a fortune on this commodity, but that doesn’t mean trading gold is an easy way to wealth. If you’re serious about trading gold, do careful research first and make sure you gain plenty of experience and knowledge before you risk any significant amounts of cash. Use our full guide to trading gold to get started.
What Is The Best Indicator For Trading Gold?
The best indicator will depend on the type of trade you are making, the timeframe, and a range of other factors. Some of the most popular among gold traders are the relative strength indicator, Bollinger bands and moving averages.
Is Gold Trading Halal In Islam?
The question of whether gold trading is permissible according to Islam is open to interpretation, and it will generally depend on the type of trade. Few scholars would raise an eyebrow at trading gold on the spot market, but many say trading derivatives such as gold futures is haram. Consult a local religious leader if you are unsure.
Can You Trade Gold Around The World?
Gold is one of the world’s most popular trading commodities, and traders from the UK, the UAE, Thailand, Indonesia and many other countries trade gold through online brokers every day. You can check TradingView for local, live gold trading prices today.
What Is The Best Strategy For Trading Gold?
There is a range of significant factors that tend to influence gold prices, and these are useful when conducting fundamental analysis for making predictions on intraday and longer-term trades. Technical analysis becomes much more important for short-term trades such as binary options, where a 5-minute gold trading strategy will come into play.
Traders should also spend time learning about gold markets and practising paper trades on a demo account to develop their own gold trading strategy. Many traders find it helpful to use live trading signals from algorithms, or to programme trading bots to execute automated trades according to their choice of parameters. Successful traders will also stay up to date with the gold market rate today and watch news headlines for events that could trigger price movements, such as a rise in inflation.