Trade precious metals such as Gold and Silver with fast execution, low-cost pricing models and flexible leverage options. Precious metals provide a useful avenue for trading strategy diversification and are considered as safe havens during times of market turmoil.
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Precious Metals are rare, naturally occurring metallic elements with high economic value. They are unusual in that they are both industrial elements and investments. Manufacturers use these metals to make electronic components, jewelry, dental equipment and catalytic converters among other things. Investors, on the other hand, collect coins and bars made out of precious metals.
This second use – as investments – makes precious metals the objects of intense speculation in commodity markets. Precious metals traders see these commodities as a form of money that holds its value better than printed paper money. Skeptics, however, argue that precious metals are simply rocks with little utility beyond their limited industrial uses. Ironically, the high premium placed on precious metals by traders makes them too expensive and impractical for most industrial applications.
How to trade Gold
Trading a contract for difference (CFD) on gold is similar to trading currencies. You are buying or selling a gold CFD in response to price movements in the market. Trading gold allows you to enter and exit trades without ever physically owning this precious metal. The concept is very similar to forex trading. Gold is traded against the US dollar and the symbol is XAUUSD. If you decide to add precious metals to your portfolio you can trade it as you would a currency pair. If you believe the gold price will fall, you can sell the “pair”, and when you think the gold price will rise, you can buy it.
For example, XAUUSD shows us that 1 ounce of Gold = $1895.24 USD.
When you’re ready to trade you will choose to go long or short. In the example above, going long means that you think that the value of Gold will rise against the US Dollar. Going short means you think it will fall.
The limited supply of precious metals and characteristics including resistance to corrosion make them highly valuable. The soft texture and shiny appearance of precious metals allows for a range of applications including jewellery, industrial uses and dentistry. Gold, silver, platinum and palladium are the most traded precious metals.
Aside from being rare and valuable, there are numerous benefits associated with trading precious metals. Historically, during economic slumps and periods of market uncertainty the value of precious metals has risen. Consequently, metals are considered a safe-haven investment and are often used as part of a risk management strategy. Metals are used as a hedging tool against inflation and fluctuations in currency prices. It is very common for traders and investors to diversify their portfolio by allocating a percentage of it to precious metals.
The factors that influence precious metals include but are not limited to:
Like all products and services, the laws of supply and demand also apply to precious metals. A shortage, surge in need or interruption in production will result in an increase in metals prices. Conversely, faster extraction through technological improvement or other factors could saturate the market and diminish their value.
Market conditions including currency prices have a direct impact on metal prices. Precious metals are traditionally negatively correlated with the US dollar making them a useful hedging tool in times of economic instability. The same applies during political uncertainty and unexpected global events.
nything that dilutes the value of a currency results in an increase in precious metal prices. This is the case with quantitative easing (printing additional money) and higher rates of inflation. As metals are considered an alternate investment to the cash rate provided by financial institutions, their value generally decreases when interest rates rise.
The continual increase in industrial uses will have a positive impact on metal prices. Precious metals are being used in high performance applications such as electronics, energy and automotive related products. An increase of demand in these products and new applications will increase demand and precious metal prices.
Precious metals are a unique asset class as they have intrinsic value, provide protection against inflation and carry a safe-haven status. When utilised to diversify a portfolio, precious metals will reduce both volatility and risk.
Open a Zero Markets trading account today and join over a million others globally trading 2,000+ markets on an easy-to-use platform. Go long or short with competitive spreads on indices, shares, forex, gold, commodities, cryptocurrencies, bonds and more. Plus, get extended hours on major US shares, AI-powered tools and 24/5 client support. Learn more about trading CFDs with Zero Markets.
Metatrader 5 (MT5)
MT5 are the favourite choice for Metals traders around the globe. Zero Markets’ MT5 are packed with extras to ensure you’re equipped with all the tools you need to make better informed trading decisions. Tight Raw Pricing, fast execution and superior charts are the building blocks for our MT5 solutions.
Two weeks later, if the price of Gold against USD (XAUUSD) is $1,902.05 and you decide to take your profit by selling 1 lot XAUUSD, the total value is $190205 and the gross profit is $250; if the price of XAUUSD has fallen to $1,897.05 and the total value is $189705 the trade loses $250.
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|Gold vs Us Dollar
|Gold vs Australian Dollar
|Gold vs Euro
|Silver vs Us Dollar
|Silver vs Australian Dollar
|Silver vs Euro
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