Trading Spot Gold: What Should You Know?


If you are an investor and want to diversify your investment portfolio, you might want to consider trade spot gold (เทรดทองคำ, term in Thai). Such a trading method pertains to the process of purchasing and selling gold on an exchange, but it is referred to as “spot gold trading” because the price of gold is determined and recorded on the spot. The majority of spot gold traders use the world currency market. This article will give you insights about spot gold trading, how it is usually done, and why you should consider it.

Trading spot gold on world currency markets

Should you wish to trade gold on the currency markets, you have to purchase and sell the gold/dollar currency pair. If you predict that gold will rise, you buy gold in a pair, which is gold/dollar. You will benefit if the price of gold drops, especially when you start to sell the pair and purchase it back at a much lower price in the future.

Bidding and asking spreads

Trading spot gold comes in two prices, which are the bid price and the ask price. The bid price is usually lower in price than the ask price, which is higher. The difference between the bid price and the asking price is referred to as the “spread,” which pertains to the amount that the dealer keeps for himself.

Location of account

One thing to keep in mind when spot trading gold is the fact that it is traded via foreign-currency accounts. The majority of these accounts can be accessed online, but it is quite difficult to locate the account. Should you wish to consider having a spot gold account, you have to make sure you do thorough research, especially when it comes to advantages and disadvantages. If you trade in a US account, your account will be protected by the US government, but you will be prevented from leveraging your investment as per US regulations. In other words, you will not be allowed to borrow funds to trade, thus, limiting your benefits, especially your profit from market upswings.

Trading gold options

It’s unfortunate that leveraging is not possible in spot gold trading, but the thing is that you have the option to increase upside and downside potential by simply trading gold options, specifically the ones tied to the spot market. What are options? It is a contract giving you the right to purchase and sell gold at a specified price. If the price of gold goes up, you can benefit from it. If you are new to spot gold options trading, you might be confused by the process, and it would take a while for you to master the ins and outs of trading options.

Trading spot gold is not a new concept and a lot of people have been doing it, especially experienced traders who are looking for ways to diversify their investment portfolio. If you have never tried trading spot gold before, now is the best time to consider doing so.