Summary: Trading gold contracts for difference (CFDs) can lead to profit from the price fluctuations of this precious metal. One of the most convenient ways to trade gold CFDs and other commodities is through a reputable broker, such as our go-to option, Plus500.
Recommended Multi-asset Broker for Online CFD Trading
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Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
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Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
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Low cost investing - No commissions and tight spreads.
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Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
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Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
About Gold
Used for centuries as a form of currency, a store of value, and as a symbol of wealth, gold is one of the world’s oldest and most valuable commodities. What’s more, this precious metal with its symbol Au is highly prized for its rarity, beauty, and unique properties, such as its malleability and conductivity.
Gold is often considered a safe-haven asset, which means that during times of economic uncertainty or market turmoil, investors tend to flock to gold as a way to preserve their wealth. As a result, the price of gold can be influenced by various factors, including economic data, geopolitical events, and market sentiment.
Who can trade gold CFDs?
Gold contracts for differences (CFDs) are not limited to a select group of traders. In fact, they are accessible to a wide range of individuals and investors. Here are some common groups that can participate in gold CFD trading:
- Individual retail traders: Anyone with a brokerage account can trade gold CFDs. You don’t need a substantial amount of capital to get started, making it accessible to retail investors;
- Professional traders: Experienced traders often use gold CFDs to diversify their portfolios or hedge against other investments;
- Institutional investors: Large financial institutions, such as banks and hedge funds, may trade gold CFDs as part of their investment strategies;
- Speculators: Some traders engage in gold CFDs purely for speculative purposes, aiming to profit from price movements without any intention of physical gold ownership.
How to buy/sell gold CFDs: Step-by-step process
Step 1: Choose a reputable brokerage
The first step is to select a reliable online brokerage that offers gold CFD trading. So, make sure that the broker is regulated and provides a user-friendly trading platform.
Once you find a brokerage that suits your investment strategy the best, sign up for an account by providing personal information and go through a verification process.
In this case, our go-to brokerage for trading gold CFDs is Plus500; a licensed and popular platform that offers several useful features for all types of investors, such as:
- Free demo accounts;
- Multi-asset CFDs on more than 2,000 financial instruments, including stocks, Forex, crypto, ETFs, commodities, and more;
- Mobile trading;
- Convenient deposit options via PayPal, Visa, Mastercard, etc.;
- Free withdrawals.
Recommended Multi-asset Broker for Online CFD Trading
-
Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
-
Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
-
Low cost investing - No commissions and tight spreads.
-
Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
-
Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
Step 2: Fund your account
Next up, you should deposit funds into your trading account. The amount you deposit will determine the size of your CFD positions, so be sure to manage your risk by only trading with money you can afford to lose.
Step 3: Choose your position
With your account funded, the next step is to decide whether you want to go long (buy) or short (sell) gold CFDs. Note that going long means you expect the price to rise, while going short means you anticipate a price decline.
In addition to choosing your position by going long or short, you should manage risk. To do so, you can set stop-loss orders to limit potential losses and take-profit orders to secure your profits when the market moves in your favor.
Step 4: Place your trade
The last step is to use your chosen trading platform to place your gold CFD order. Therefore, be sure to specify the number of CFDs you want to buy or sell and confirm the trade. Monitor your trade by keeping a close eye on it as the gold price fluctuates. You can adjust your stop-loss and take-profit levels if needed.
Gold price today
The price of gold can change rapidly throughout the trading day. It’s, therefore, important to stay updated on the current gold price, as it directly impacts your trading decisions.
Pros and cons of gold CFD trading
Pros
- Liquidity: Gold CFDs are highly liquid, making it easy to enter and exit positions;
- Diversification: You can diversify your portfolio with gold CFDs, spreading risk across asset classes;
- Short-selling: Profit from both rising and falling gold prices with CFDs;
- Lower costs: Transaction costs are typically lower than physical gold or gold-related securities;
- Hedging: Use gold CFDs to hedge against adverse price movements in other assets.
Cons
- Leverage risk: Managing leverage can be challenging, especially for beginners;
- No ownership: You don’t own physical gold, missing out on its advantages;
- Overnight costs: Holding positions overnight may incur financing costs;
- Volatility: Gold prices can be highly volatile, increasing the risk of losses;
- Market hours: Gold CFD trading has specific hours of operation.
Common mistakes when trading gold CFDs
Avoiding common mistakes is crucial when trading Gold CFDs, so here are some pitfalls to watch out for:
- Overleveraging: Using too much leverage can lead to substantial losses. Be mindful of your position size relative to your account balance;
- Lack of research: Failing to research the gold market and make informed decisions can result in losses;
- Ignoring risk management: Neglecting to set stop-loss and take-profit orders can lead to uncontrolled losses;
- Emotional trading: Letting emotions, such as fear and greed, drive your trading decisions can lead to poor outcomes;
- Chasing losses: Trying to recover losses by making impulsive trades can exacerbate losses.
If you’re interested, you can read our other gold-related guides:
- How to Invest in Gold in the UK;
- How to Buy Gold with PayPal;
- How to Buy Gold with Chase;
- How to Buy Gold with Zelle;
- How to Buy Gold with Wells Fargo;
- How to Buy Gold with Capital One.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs
What is a CFD?
A contract for difference (CFD) is a financial derivative that allows traders to speculate on the price movements of various assets, including gold, without owning the underlying asset.
How do I choose a reliable broker?
Look for a broker with a good reputation, regulatory compliance, competitive spreads, and a user-friendly trading platform.
Is trading gold CFDs suitable for beginners?
While beginners can trade gold CFDs, it’s important to educate yourself, start with a demo account, and practice risk management.
Recommended Multi-asset Broker for Online CFD Trading
-
Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
-
Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
-
Low cost investing - No commissions and tight spreads.
-
Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
-
Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
