What is gold trading?

Gold trading is the practice of speculating on the price of gold markets in order to make a profit – usually via futures, options, spot prices or exchange-traded funds (ETFs). Usually, physical gold bars or coins are not handled during the transaction; instead they are settled in cash.

There are a number of reasons why you might decide to trade gold, including pure speculation, wanting to buy and take ownership of the physical gold, or as a hedge against instability.

When trading gold, you don’t necessarily need to hold the traditional mantra of ‘buy low, sell high’, as you can go long and short on gold prices – taking advantage of markets that fall in price, as well as those that rise. Whichever position you take, the aim of gold trading is to predict which direction the market will move in. The further the market moves in the direction you’ve predicted, the more you’d profit and the more it moves against you, the higher your losses.