With the continuous changes in the global economy and uncertainty in the financial market, investors are paying increasing attention to the precious metals market. The precious metals market includes investments in gold, silver and other precious metals, which have become an important part of the investment portfolio due to their unique characteristics. This article will take an in-depth look at the price trends of precious metals, the factors that affect prices, and the strategies investors should adopt.
Precious Metals Market Overview
Precious metals currently available for investment mainly refer to gold, silver, platinum, palladium, etc. Participants in the global precious metals market include central banks, international organizations, exchanges, financial institutions, and individual investors. The precious metals market is not only large in scale, but also global, highly liquid, and traded 24 hours a day.
Factors affecting precious metal prices
1. Global Economy and Inflation:
Precious metal prices are closely related to global economic conditions and inflation levels. When economic growth slows down or deflation occurs, investors tend to purchase precious metals as safe-haven assets. In addition, inflationary pressure will also push investors to buy precious metals to preserve value.
2. Geopolitical risks:
Factors such as political instability, war or geopolitical tensions can spur investors to purchase precious metals to avoid risk.
3. Currency market changes:
Changes in monetary policy and interest rate levels have an impact on precious metal prices. For example, when interest rates fall, the money supply increases, thereby reducing the purchasing power of currencies such as the U.S. dollar, prompting investors to turn to precious metals trading and investment.
4. Market sentiment fluctuations:
Investor sentiment also has a certain impact on precious metal prices. Market panic, uncertainty, or concerns about the future of the economy may lead investors to purchase precious metals.
5. Other factors:
Technological progress, environmental protection needs, the discovery of new mineral deposits, etc. will also have an impact on precious metal prices.
Gold is highly liquid, can be easily bought and sold, and has many market participants.
Gold is a safe-haven asset. Investors can help diversify assets to combat risks through gold trading. In the case of global economic instability or geopolitical tension, this precious metal can hedge against the risk of inflation when inflation rises. At that time, the purchasing power of currency will decrease, and the price of gold will rise as a result. Holding gold can help the central bank hedge against inflation risks.
In addition, physical demand for gold is also a key factor affecting its price. The demand for this precious metal continues not only in the financial sector but also in industries such as jewelry manufacturing, electronics industry and dentistry. This physical demand is usually affected by global economic and consumer trends, which directly affects the supply and demand balance of gold.
How to invest in gold
Physical gold buying and selling
Physical gold is one of the precious metal investment methods, which mainly involves standardized gold bars and gold coins that are refined and processed according to specified shapes, specifications, colors, and weights. Physical gold trading is a long-term investment and profits are made when the price of gold rises. However, buying physical gold will face various difficulties such as blocked repurchase channels, high storage costs, and risks in withdrawing physical gold.
gold futures
Gold futures are also a very traditional and direct precious metal investment/speculation tool. Futures trading comes with leverage, which can bring large fluctuations to account funds. However, the threshold for futures trading is high, requiring a large capital investment, and the trading and delivery rules are relatively complex. The requirements for traders are relatively high.
Gold CFD Trading
Using CFDs to trade precious metals such as gold, since it only involves price differences, investors do not need to actually purchase or hold physical objects, thus avoiding the complex procedures and withdrawal risks caused by physical transactions. Customers who open an account through an online foreign licensed securities firm (broker) only need to pay a certain margin to the broker, and the broker will provide long and short transactions. The rules for trading CFDs are more flexible than ETF buying/redemption. You can buy, sell short or close positions around the clock, and it is suitable for both short-term and long-term trading. Investors can also choose a suitable leverage ratio to utilize funds more efficiently. As a licensed brokerage, FXTM provides a variety of investment products including precious metal CFD transactions, which fully match the London spot gold price and trading time, and investors do not have to worry about expiration dates, delivery and other complex futures trading rules.