Not only is gold valuable as an investment and for jewellery-making, but it’s also needed to produce electronic and medical devices. It has always been highly prized and connected to financial prosperity. Investments in the mineral, have an inclination to keep their value in the financial markets for extended periods of time offering commodity dealers a permanent safe haven.
There are many opportunities for traders to trade in it but the question remains, when to trade gold?
Why trade in gold?
Gold is a well-known commodity that is always valuable. It has consistently demonstrated itself as a dependable hedge against inflation and currency depreciation.The investments can be a part of a diversified, long-term investing strategy. It is a safe haven and useful tool for risk management since it has always been appealing.
Gold’s real worth can be protected against rising living costs and kept stable during uncertain economic times. Global liquidity for the market is provided by global mining and trade.
When to trade gold?
Certain times of the day usually see more volatility in the gold price. Traders looking to profit from the higher price fluctuation should consider day trading during these more volatile moments.
Although the foreign exchange market (forex) is open for trade around the clock, the London trading session (08:00-18:00 GMT) is when most traders engage in gold trades due to the enormous volume that occurs during this time.
What affects the price of gold?
There are many factors that influence gold’s perceived value other than the broader economy and its uses as a material. Some factors are:
Supply and Demand
Gold prices rise and fall with demand. Jewellery accounts for most of the mineral ‘s global demand. One of its technological and industrial uses is the creation of stents, other medical equipment, and precision electronics like GPS units. Thus, the mineral ‘s prices may rise with consumer product demand.
Wealth Protection
When the economy is weak, more individuals buy the mineral because of its durability. If bond, stock, and real estate returns are low,prices may rise due to increased investment demand. Gold can protect against inflation and currency devaluation.
Value of the US Dollar
Since gold is dollar-denominated, its price is usually inversely related to the dollar. A stronger U.S. dollar keeps the prices lower and more controlled, while a weaker currency increases demand and raises its prices.
Central Bank Reserves
Gold and paper money are held in reserve by central banks. The prices of the mineral usually increase as central banks diversify their monetary reserves.
Inflation
Gold is generally traded by investors as a hedge against inflation, therefore its price rises as inflation rises and lowers as inflation declines.
How to invest or trade in gold
Each trader must select their ideal gold investment approach, whether it is in jewellery, coins, bars or its bullion. Trader could also invest in its ETFs, spot contracts, or mining company stocks.
Buying gold nuggets or coins or even tiny shares in its bullion stored in safe vaults can be done for as little as a few hundred dollars USD. However, because of their sluggishness and inability to offer short sales, these approaches are impractical for trading. Due to the retail mark-up, the value of gold coins does not reflect the actual mineral price. In conclusion, several factors influence your decision of when to trade gold, such as the current price of the mineral, including supply and demand, the value of the dollar, and the desire to protect one’s wealth from inflation and currency depreciation by holding onto it.