The gold market has been fascinating to watch over the last few years – although it has not always been the easiest market to call. Yes, the general trend has been up but there have been some large swings and corrections along the way. With the Chinese economy doing so well there must be increasing amounts of pressure to float the Yuan. This pressure is underpinning the price of gold. A stronger Yuan translates into a weaker Dollar, Euro and Pound.
While this does not make gold any more valuable in Global terms, it does obviously have an effect on its price in these currencies.
Those who like to take the ultra-long view seem to be speculating on gold benefiting from the strength of the Yuan. However, it is not all good news for the metal. With the world economy beginning to pick up, the case for higher interest rates is getting stronger. Whilst the attraction for gold is self evident, it remains to be seen whether it can hold up under the pressure of higher rates. If you are looking to trade gold then note that the metal is looking increasingly volatile and even ‘gapping’ occasionally. Normally the metal moves up/down in $0.10 increments. When it ‘gaps’ in highly volatile markets it can jump $10 at a time. Even in the huge moves of the last few years there have been few such gaps. If the current volatility continues that might prove to be an irresistible attraction for the sellers of the precious metal. If you are trading the gold market through a spread trading account then you may want to add a Guaranteed Stop Loss Order to your trades to help reduce your risk.
If you start losing money on a market and the market continues to move in the wrong direction, but hits the level that your Guaranteed Stop Loss order is set at, then, even if the market is ‘Gapping’, your trade will be closed. You won’t lose any further funds.
Note that there are also other benefits of using the spread trading account if you are trading gold and other commodities. As suggested above, being able to ‘short’ a market provides interesting opportunities. You do not have to speculate on markets to go up. If your research suggests that the gold spread will go down you can speculate on it to go down. If your research indicates that the price of gold will go up you can speculate on it to go up.
Usefully, spread trading profits do not incur any income or capital gains tax (tax laws may vary if you live outside of the UK or Ireland).
Finally note that with spread trading you can lose more than you originally staked or invested. Please ensure that spread trading matches your investment requirements as it does carry a high level of risk to your capital. Familiarise yourself with the risks. Seek independent advice if necessary.
About the Author
Based in the heart of London’s financial district, Daniel Jones is a seasoned spread betting professional and commentator on some of the leading financial spread betting sites.
What are the reasons because of which the gold futures market can crash?
first – don’t read smurf boy, he doesn’t have a clue what he is talking about. The value of gold fluctuates 24 hours a day. America also stopped basing our currency on gold in 1971 (which was a big mistake).
Technically the value of god is always based upon the demand for it. Although the value of gold could drop significantly if the demand dropped, it would be a once in a lifetime event for it to be worth $0. I personally believe that gold is a little over valued right now. You should have bought gold 10 years ago. You would be doing well. Gold tends to have its value based on the confidence held in paper currencies. The lowest god could ever get would be if the world had one currency and the people were confident in its stability. You really don’t address the value, but rather the futures of gold. A large number of indicators will affect gold’s futures, I think the main one will be the stabilizing of the world’s markets. This will slowly happen over the next two years. Over the nest year gold will rise some and then begin to slowly fall for a period of at least 5 years. Be careful buying gold futures now. Your window to profit is closing.
Deutsche Bank’s Brebner Sees Gold at 2011 High of $1550
Gold Market
Gold Market
China and the Gold Market
The gold market has been fascinating to watch over the last few years – although it has not always been the easiest market to call. Yes, the general trend has been up but there have been some large swings and corrections along the way.
With the Chinese economy doing so well there must be increasing amounts of pressure to float the Yuan. This pressure is underpinning the price of gold. A stronger Yuan translates into a weaker Dollar, Euro and Pound.
While this does not make gold any more valuable in Global terms, it does obviously have an effect on its price in these currencies.
Those who like to take the ultra-long view seem to be speculating on gold benefiting from the strength of the Yuan.
However, it is not all good news for the metal. With the world economy beginning to pick up, the case for higher interest rates is getting stronger. Whilst the attraction for gold is self evident, it remains to be seen whether it can hold up under the pressure of higher rates.
If you are looking to trade gold then note that the metal is looking increasingly volatile and even ‘gapping’ occasionally. Normally the metal moves up/down in $0.10 increments. When it ‘gaps’ in highly volatile markets it can jump $10 at a time.
Even in the huge moves of the last few years there have been few such gaps. If the current volatility continues that might prove to be an irresistible attraction for the sellers of the precious metal.
If you are trading the gold market through a spread trading account then you may want to add a Guaranteed Stop Loss Order to your trades to help reduce your risk.
If you start losing money on a market and the market continues to move in the wrong direction, but hits the level that your Guaranteed Stop Loss order is set at, then, even if the market is ‘Gapping’, your trade will be closed. You won’t lose any further funds.
Note that there are also other benefits of using the spread trading account if you are trading gold and other commodities. As suggested above, being able to ‘short’ a market provides interesting opportunities. You do not have to speculate on markets to go up. If your research suggests that the gold spread will go down you can speculate on it to go down. If your research indicates that the price of gold will go up you can speculate on it to go up.
Usefully, spread trading profits do not incur any income or capital gains tax (tax laws may vary if you live outside of the UK or Ireland).
Finally note that with spread trading you can lose more than you originally staked or invested. Please ensure that spread trading matches your investment requirements as it does carry a high level of risk to your capital. Familiarise yourself with the risks. Seek independent advice if necessary.
About the Author
Based in the heart of London’s financial district, Daniel Jones is a seasoned spread betting professional and commentator on some of the leading financial spread betting sites.
What are the reasons because of which the gold futures market can crash?
first – don’t read smurf boy, he doesn’t have a clue what he is talking about. The value of gold fluctuates 24 hours a day. America also stopped basing our currency on gold in 1971 (which was a big mistake).
Technically the value of god is always based upon the demand for it. Although the value of gold could drop significantly if the demand dropped, it would be a once in a lifetime event for it to be worth $0. I personally believe that gold is a little over valued right now. You should have bought gold 10 years ago. You would be doing well. Gold tends to have its value based on the confidence held in paper currencies. The lowest god could ever get would be if the world had one currency and the people were confident in its stability. You really don’t address the value, but rather the futures of gold. A large number of indicators will affect gold’s futures, I think the main one will be the stabilizing of the world’s markets. This will slowly happen over the next two years. Over the nest year gold will rise some and then begin to slowly fall for a period of at least 5 years. Be careful buying gold futures now. Your window to profit is closing.
Deutsche Bank’s Brebner Sees Gold at 2011 High of $1550