Gold trading

Discover the importance of the popular precious metal as a financial asset, and get tips on how to trade gold with IG.

Gold has been the most highly desired of the world’s precious metals since ancient times, coveted for both its cultural and financial value. It was integral to valuation of the world’s currencies well into the 20th century, intrinsically linked to the price of the US dollar until the 1970s.

IG even took its original name – Investors’ Gold – from the metal, when in 1974 it was launched to offer clients the opportunity to trade gold on leverage rather than owning it outright. Trading gold is often popular as a form of insurance, as the metal is considered a  safe haven in times of financial turbulence. 

Why trade gold with IG?

  • Free alerts

    Set free alerts to know when the metal’s on the move

  • Low spreads

    Trade on some of the lowest gold spreads in the market

  • Expert analysis

    Inform your trading on gold with regular articles from our analysts

  • Easy-to-use platform

    Stay on top of your trades on gold with our best-ever web platform

  • Educational resources

    Become a better gold trader with our interactive IG Academy app

  • Fast charting

    Make your call on where gold's headed with our real-time charts

Five top tips for trading gold

1. Plan your trading

Gold tends to elicit a strong emotional reaction in traders, leading them to place far too much on a single trade or add to a losing position. Remove this from the equation and try to think of the commodity only in terms of price movements. Develop a trading plan with a set risk-reward ratio, and stick to it. 
 

2. Analyse the market

Use charts to get an idea of how gold behaves over different timeframes. Backtest your strategies on historical data to see how they’d pan out. Look for patterns, wait for breakouts before trading, and trade with the trend. You can compare up to four different timeframes at once with the charts in the IG Trading platform, and get free trading signals to help you make your call.
 

3. Learn what moves gold

While gold tends not to be as affected by political and economic events as some other markets, it has its own price drivers that you’ll need to watch when trading. You can read about these below, or learn more by watching our video.
 

4. Trade mining stocks 

Trading CFDs on the share price of companies that mine gold are both great ways to gain indirect exposure to gold. Share prices can sometimes be good value compared to the gold price itself, and are obviously more affected by economic events and company announcements. Keep an eye on news and fundamentals to help inform your trades. 
 

5. Consider a gold ETF 

You can use a leveraged gold exchange-traded fund (ETF) to deliver amplified results against the metal’s price movements. For example, a double gold ETF will attempt to double any move that spot gold makes, and an inverse gold ETF offers another way of shorting the gold price. You can also use ETFs to gain exposure in more than just bullion price, with some funds including mining stocks in their ‘basket.’1 

Factors that influence the price of gold

Gold demand

Gold’s price is likely to rise as  demand for it increases. Since the 1970s the amount of gold bought annually has quadrupled, thanks to its cultural and financial value across the world, and application in diverse industries ranging from technology to jewellery. 

The dollar

Gold and the US dollar have a complicated, but usually inverse, relationship. When the dollar falls, investors looking for an alternative store of value rush in to buy gold, driving up its price. A falling dollar also increases the value of other currencies, and that greater buying power also increases demand for gold that was previously unaffordable.

Financial stress and political crises

In periods of financial stress and/or political instability, gold is used as a safe-haven investment as it tends to retain its value. Given the considerable uncertainties facing the world economy since 2008, gold has become a popular investment vehicle. 

Inflation

Inflation and interest rates are closely related – a sustained rise in general prices tends to lead to higher interest rates. Gold tends to perform strongly in high-inflation and deflation scenarios where there is a sharp rise in financial stress. 

Gold as a safe haven

Gold is an asset that investors tend to rely heavily on in times of political or fiscal uncertainty. Unlike a currency, the amount of gold can’t be expanded at will, and unlike a stock, there’s no underlying company that can go out of business. As a result, the metal is often used as a hedging tool against inflation or currency devaluation.

However, when any investment becomes too popular there’s the risk of a price bubble being created, which could send prices spiralling when it bursts. For this reason, many gold traders choose to diversify into other markets. 

Live prices

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Spot Gold
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Prices above are subject to our website terms and conditions. Prices are indicative only.

Silver

Like gold, silver is often used as an investment, and the prices of the two metals have been known to move correspondingly. However, silver is far more in demand as an industrial asset than gold, so events in the technology sector – where it’s used for its conductivity – have far more of an effect on its price.  

Discover silver

Bitcoin

The cryptocurrency holds a similar appeal to gold as a store of value. Its supply is fixed at a set level so, unlike traditional currency and like precious metals, there’s less danger that it could be overproduced and diminish in value as a result. However, Bitcoin lacks the heritage and proven track record of more traditional investment methods like gold.

Discover Bitcoin

Gold supply and demand

Gold is a commodity with a truly global reach. It is mined on every continent except for Antarctica, and is shipped all over the planet to be refined and sold. The metal has diverse uses that straddle different industry sectors, from jewellery and technology to its use by central banks.

Gold mining

Mining provides around 75% of the world’s gold supply. However, annual demand requires more gold than is mined – the shortfall is made up from recycling.

No one geographical region dominates gold supply, a contrast to the mid-20th century when the majority of mined gold came from South Africa.

India's gold demand

India has a longstanding cultural history involving the importation of gold, usually ranking in the top two of the world’s most gold-consuming countries year on year.

The precious metal has significant cultural importance in India, as it is typically used for jewellery and investment. 

Central banks

Gold is often used as a reserve by central banks, as a guarantee. Demand here has increased since the 2008 financial crisis.

To give you an idea of the change, central banks sold 7853 tonnes of gold between 1987 and 2009; between 2010 and 2016 they bought 3297 tonnes.

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FAQs

What are gold's trading hours?

 You can trade spot and futures contracts around the clock, except between 10pm and 11pm (London time). 

What's the relationship between forex and gold?

Gold is denominated in dollars, making it susceptible to fluctuations in the currency’s value. The two have an inverse relationship, so when the dollar falls, gold tends to rise. This is because gold is viewed as an ideal way of storing value when the dollar is weak, and is less expensive for other countries to purchase.

How can I start trading gold? 

You can trade CFDs on gold with IG. Simply set up an account with us in a matter of minutes, log in to our trading platform and take a position on the precious metal. 

Open an account

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1 Please read the ETF's prospectus or Key Investor Information Document (KIID) before investing.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

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Central bank policy

Interest rates are another determinant that can influence gold price movements. Since the financial crisis of 2008, the inverse relationship between gold price and interest rates has been particularly strong. Periods of low or negative interest rates are especially positive for gold. 

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