Gold trading is, by far, one of the most popular commodities on the market. Yet, many users can't distinguish between the various gold shares and gold stocks offered and don’t know much about the gold market in general. We at CM trading are here to help!
South Africa has been the second largest producer of gold since the very beginning, so it shouldn’t be too surprising that gold trading is extremely common there and the gold market is quite strong.
The best thing about Gold trading is that it doesn’t involve physical gold trades, but rather the option to buy and sell through options and gold shares. In addition to that, it's very convenient as it’s a 24/7 market. You don’t have to trade gold in the traditional way anymore. The market has changed considerably, and with legislation amendments, it is now possible to trade this commodity through ETFs and gold shares, both of which you can access with CM trading.
Gold is a highly volatile market, which means that the potential growth is especially high. Although no longer a safe haven as it was traditionally, gold is still the investment instrument of choice for periods of high inflation.
Production of gold is more or less sitting at its limit, while at the same time it is a supply and demand influenced product.
There are many factors that influence gold trading prices. Perhaps the most well-known is uncertainty. People tend to run to gold as a hedge product in times of high inflation and uncertainty. But we at CM Trading believe it’s far from being the only factor.
Monetary policy has a profound influence too. Gold trading becomes attractive when the opportunity cost of forgoing interest-based assets gets low.
Economic data is another big issue. Jobs reports, wage and manufacturing data and GDP growth has a massive impact on how and where the gold price moves. Strong economies tend to push gold lower, while weak ones lift it up.
As we mentioned above, supply and demand have a big influence too. Inflation, or the rising cost of goods, also push gold prices higher. Inflation usually means economic growth and expansion. The push-pull between interest rates and inflation creates a market conducive to gold trading.
The movement of certain currencies can also have an effect on the gold market. This mainly applies to the US dollar, as that’s how gold is listed. Falling dollar values tend to push gold prices up.
Remember that these sorts of moves are primarily fear-based, and thus hard to predict.
Gold trading is an interesting stalwart of the trading market. With CM trading you get an easy access to the gold market, as well as detailed information to help you make the right trade.
Are you ready to start trading gold today? Start trading the gold market with CM Trading, the best performing broker in Africa.
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