This year is projected to be an exciting one for the gold market. The global economic growth and instabilities will drive gold demand, maintaining it the first choice of many investors. Read below how this market is doing so far, which are the factors that influence it and which is the best strategy to trade gold asset.
Gold remains a safe investment in 2019
Although gold found some support in October, following a surge in U.S. Treasury yields which triggered a sell-off in equities, the asset’s speculative positioning has hit record lows in the last months of 2018. There are a lot of tensions going on right now around the globe including Brexit, the unclear political future of Venezuela, and the longest Government shutdown in the United States. All of these events make gold a major hedge against risk and uncertainty and the safe-haven commodity is set to be one of the most attractive to investors this year.
Gold prices depend on a number of factors that you should consider before placing a trade. Here are the main ones:
- The monetary policy and the U.S. dollar
The precious metal is sensitive to higher interest rates because their raise tends to boost the dollar, making gold more expensive for buyers with different currencies.
- The supply and demand
The demand has never been a problem for gold due to its use in jewelry-making, in technological applications and its role of safe-haven. However, the supply can become a bit problematic in the future. Starting from the 2000s, gold mining has been in perpetual decline. Most accessible areas have been already mined, making the process of gold mining much harder and expensive in our days. The major gold producing countries you should keep an eye on are China, the United States, Australia, Russia, and South Africa
- The U.S. economic data
The GDP growth, the unemployment rate, the wage and manufacturing data, as well as the Federal Open Market Committee (FOMC) meetings can in turn drive gold prices.
The best gold trading strategy
You can invest in gold through a contract for difference (CFD) or gold future provided by an online broker. For your investment and strategy to bring the best results, you need to pay a lot of attention to the broker you choose. TradeFW.com is an online licensed and regulated commodities broker that provides excellent trading conditions to its customers and serves as a great example of how a professional broker’s services should look like. TradeFw’s modern and intuitive platform with customizable charts and tools, two account types geared with features addressed to novice and experienced traders, and a team of experts available all week – are the characteristics of a broker that could immensely increase your chances of placing a winning trade.
The best trading strategy you could approach is the one which reflects your trading style and goals. However, certain strategies have proved to be very effective with this asset. Check them out and see if they suit you:
- Shorting gold is a strategy that helps you profit from gold when its prices are dropping. You can apply it by selling (shorting) one or more gold futures contracts at a futures exchange.
- Trend analysis can also be an effective strategy to trade the precious metal. Pay attention to the support & resistance levels and trendlines, and make the entry position when the market “tells” you.
- The moving averages strategy can also help you make superb returns. It implies opening a buying position when the shorter-term, faster moving average passes above the slower one.
Overall, the best strategy to trade gold is to have a pre-settled plan with fixed objectives, a fixed daily trading budget and of course, clear goals. You need to know why are you placing the trade in that moment by studying the factors mentioned above, you need to know when to enter the position, when to exist and what to expect from it.
The many advantages that come with gold trading
You’ve probably figured them out by now, but let’s discuss the advantages that gold trading carries. The most important one: it is a liquid asset and can bring you huge returns! Gold is a lucrative asset even in times of economic and political turmoil; and it is characterized by a strong and constant demand. The safe-haven commodity is one of the best portfolio diversifiers and the best hedge for financial market risks.
Gold is one of the world’s most valuable commodities and holds the potential to bring superb returns. There is a plethora of strategies available to trade this asset, but the best one is the strategy you create in accordance to your needs and goals as an investor. With the services of a professional broker like TradeFw, the chances to fail are barely there. Trading gold is always a good decision and you shouldn’t miss this opportunity!