Trading Gold (XAU/USD)
Gold is one of the most sought-after investments in the metals market. Why? Traders often use gold to diversify risk on coming inflation or economic events that may negatively impact their financial holdings. This happens in multiple forms: Some keep gold coins and jewelry, others trade in futures contracts and derivatives.
In times past, gold was fixed to currency values, but those days are gone; no country, in fact, still uses the gold standard. That doesn't mean the value diminished. Gold still ranks as the costliest of precious metals, with its price benchmarked by the London bullion market.
Many look to trade gold as a derivative through futures and options. Inside the United States, many trade gold over-the-counter through the New York Commodities Exchange. Outside of the U.S., other options exists, like contracts for difference or spread bets, which allow traders to speculate on the price movement of the metal.
Trading gold as a CFD has some benefits over other investments. Unlike copper, there is no expiration, so investments can be held as long as the trader sees fit. Unlike stocks, gold offers perceived stability for many traders, while stocks are looked at as investments that payoff with the growth of the companies. Leverage is used frequently when trading gold CFDs, which increases both wins and losses.
Ultimately, gold is one of the oldest, most exciting ways to invest in the global stock market. In times of war and turmoil, peace and prosperity, gold always remains at the forefront of many investor portfolios.