Similar to Forex trading, metals are traded on a 24-hour time frame. Metals can be a great asset to diversify your trading strategy: as global markets, supply and demand are not driven by any one country in particular, but the world as a whole. It represents volatile markets such as gold, that offers many trading opportunities in rising and falling markets. Metals are tradable commodities where investors take short or long positions of the metals’ prices.
It is important to note that foreign exchange market is closely connected to the trajectory of precious metals, like gold and silver. They maintain a strong inversely proportional relationship. Forex traders should be aware of this relationship. Watching precious metals will give traders good insight into market trends likely to occur.
Precious metals are volatile, making them an excellent commodity to trade. Precious metals are consistently popular, a trend which doesn't seem to have an end in sight. Of course, not all precious metals are equal, and some are better performers than others.
Gold is known as the best precious metal for investment purposes. It is physically durable, malleable and can conduct heat and electricity. Its major uses are, of course, jewellery and currency. Trade originally relied on gold as a commodity, with it being used as currency. Although that is no longer the case, it is still closely connected to the Forex market.
Silver is another important commodity, but in a different way to gold. While silver is used for jewellery and currency, it also has a very practical purpose as an industrial metal. This makes price fluctuations in silver far more volatile than gold. Therefore, while gold does not so much work on supply/demand, supply/demand has an important impact on silver.
So, while precious metals and the Forex market are not directly connected, they affect one another, and the same events have an impact on them. These include:
- Financial concerns: gold especially is a safe haven for traders when other markets are weak. When a currency drops (especially the USD), gold tends to strengthen. Traders trade their dollars for gold, leaving the currency volatile and gold strong.
- Inflation: while currencies are subject to rates and inflation, gold retains its intrinsic value.
- War and politics: war and political upheaval heavily impacts currencies. This then sends traders running to gold and other precious metals which can be traded no matter what happens to the currency.
So, monitoring precious metals can help you to make decisions in the foreign exchange market. Since currencies and precious metals are so closely connected, fluctuations in the price of precious metals are a good predictor of what will happen on foreign exchange.
Additionally, trading gold and other spot metals creates great opportunities for hedging positions in every liquid market.
There are numerous advantages of trading precious metals with our company:
- Short selling, or “going short” is a way for a trader to profit on decreasing prices. This process allows one to trade and benefit when the markets are down. Contrary to physical metals trading, trading them as CFDs, provides greater flexibility and liquidity which allows the trader to go short with less risks compared to trading the actual metals.
- Leveraged trading allows a trader to open a much larger position with minimum investment, meaning the trader can build up and control larger sums of money. Leverage can magnify your potential profits and at the same time can magnify your losses.
- Auto trading, is a method of trading with a computer program which helps determine if a trader should buy or sell at any given time. The trader sets up the software to make certain decisions based on technical rules that it implements.
Currently, clients of Pylon FX have an opportunity to trade Gold and Silver on MT4 platform.
|XAUUSD||Gold against USD|
|XAGUSD||Silver against USD|