Gold trading has taken off since the global financial crisis as investors seek to diversify their portfolios out of cash in to tangible assets. Gold has traditionally been a preserver of wealth and is seen by some as a hedge against inflation and the devaluing of a currency i.e. a reduction in its purchasing power. As governments across the globe employ expansionary policies lead by the devaluing of exchange rates, gold’s popularity has increased beyond that of the rise in its price.
Spot Gold or Silver can be traded as either a CFD on 1:100 leverage or against the US Dollar or Euro as a currency pair on 1:400 leverage.
Gold Trading Example
Opening a Gold position
Opening the Position
The price of gold is 1660.00/1660.50 you believe that the price of Gold will rise so you decide to buy 2 Gold CFDs at 1660.50 (one contract = 10 troy oz). There is no commission to pay on any of our commodities.
Closing the Position
One week later the price of gold has increased to 1680.00/1680.5. You decide to take your profit and sell 2 contracts at 1680.00.
The gross profit on your trade is calculated as follows:
| Calculation | |
|---|---|
| Opening Price | 1660.50 |
| Closing Price | 1680.00 |
| Difference | 19.50 |
| Gross Profit on Trade | 2 contracts x 10 oz x US $19.50 = US $390 |
