7 Tips for Trading Gold Profitably

Whether you’re an existing or aspiring gold trader, here are some helpful bits of knowledge and information that will power up your toolbox.

3 min readNov 9, 2021

Down through history, gold has been a store of wealth and a symbol of value. These days, people don’t typically buy physical gold but that doesn’t mean that gold is not still being traded.

In the global financial markets, gold is one of the most valuable and traded assets. Here are a few pointers for trading gold in the global financial markets.

1. Diversify your Portfolio with Gold

When the markets go into high volatility and turbulence, some assets keep their value or increase in value against the odds; such assets are called ‘Safe Havens’ and gold is one of them.

Owing to gold’s historical value, inherent value, and general lack of government-determined interest rates, it typically remains stable when other assets experience a downswing. As a result, it is very useful for portfolio diversification.

2. Hedge with Gold

For the same reasons that gold is great for portfolio diversification, it is great for hedging. Gold typically determines its own value, so it is a relatively stable asset. When trading or investing during market volatility, it is advised that an individual takes a position in gold to hedge against losses on the other investments since gold typically behaves opposite to most assets.

3. Trade Gold CFDs

Trading involves speculating on the price action of a selected asset. A person who trades gold CFDs stands the chance of making profits off gold either in a buy or sell position depending on the type of trade placed. Gold is a relatively stable asset so it might be best for position traders who will swing into action when gold prices inevitably start to eventually change, either by rising or falling.

4. Trade the Gold:Silver Ratio

The Gold:Silver ratio tracks the value of one metal relative to the other, telling you how many ounces of Silver is required to purchase one ounce of Gold per time.

Trading the Silver:Gold ratio by hedging is a smart trading move. Ideally, going long on one and short on the other asset will get you the best of both worlds.

Whether you choose to trade the Gold:Silver ratio or just stick to gold, the ratio is still useful for indicating a good time to buy or sell.

5. Consider Peak Trading Hours

While gold is available to be traded all day long, it’s peak liquidity usually occurs during New York’s trading hours. Depending on your goal as a trader, you might want to trade within or outside of the high liquidity period.

6. Trade within Previous Landmarks

Because gold maintains stable prices, it typically trades in a range unless there are staggering economic events, although those are few and rarely affect gold significantly. For Forex traders this could be good news as you can limit your trades to previous highs and lows in order to reduce analysis and get straight to business. Additional security can also be found in trading like this.

7. Federal Reserve Currency

When money was first introduced, coins were the choice instrument because they were minted in such a way that they carried their weight in gold, meaning that a 20 Shilling coin could purchase you 20 Shillings of gold. However, coins were too cumbersome to keep up with so notes were introduced.

The U.S federal reserve still stores pure gold bars in massive quantities though. This is to shore up wealth in case currency fails. The actions of federal reserves, therefore, affect the price and availability of gold.




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