Gold investment forex is highly appreciated by many experts. Even with economic instability, XAUUSD is still a safe and profitable investment commodity. To be successful with forex gold, you need to have a clear understanding of forex gold knowledge as well as cultivate trading experience. This article, Learn Forex Trading will guide you to the most effective way to invest gold in forex!
Overview of gold investment Forex
Forex gold is chosen by many young traders. Besides attractive profits, gold trading also contains many risks.
What is Gold investment forex?
Forex gold is a popular commodity in the foreign exchange market. Gold investment forex is a form of trading precious metals – gold, through the XAUUSD index. This transaction is done 100% online on forex brokers.
Instead of having to go directly to stores to buy traditional gold, anyone, anywhere can participate in forex gold trading.
See more: World gold price and interesting thing about gold
What is XAUUSD?
XAUUSD is the Forex gold symbol in the foreign exchange market. In there:
- XAU: yellow symbol.
- USD: symbol for US dollar.
In other words, XAUUSD is the value of gold converted to US dollars, also known as the gold/USD exchange rate. Specifically, 1 lot of XAUUSD is the base unit used in exchanging and trading gold on exchanges. Exchange:
- 1 lot of XAUUSD is equivalent to 100 ounces of gold
- 1 mini lot of XAUUSD is equivalent to 10 ounces of gold (1/10 lot)
- 1 micro lot XAUUSD = 1 ounce of gold (1/100 lot)
Advantages of Gold Investment Forex
- You don’t have to waste time choosing to buy or finding a safe place to store it like physical gold.
- The liquidity is much higher than that of real gold. You can sell forex gold at any time, right on the broker exchange, with a large number of traders.
- High leverage (1:200 – 1:1000) gives you many investment opportunities and maximizes profits. Even people with little capital can still participate. However, you need to be alert because opportunities always come with potential risks.
- Quickly profitable: After 5 – 10 years, physical gold will have strong fluctuations and become profitable. As for XAUUSD gold, the price goes up and down every day. Suitable for traders who trade in two directions, whether up or down, you can still make a profit.
Factors affecting Gold investment forex
Currently, many factors directly impact gold prices. Therefore, forex gold traders need to monitor gold prices as well as news and events to make appropriate decisions.
World’s economic crisis
Gold and money are the two most popular assets, reflecting whether the economy is strong or weak. Therefore, all issues related to the economy such as crisis, inflation,… all impact gold prices directly. Of course, during a crisis, gold prices will still fluctuate more strongly than during stable periods.
Policy to buy gold from central banks
Currency values often fluctuate. This causes traders to switch to low-volatility funds. Specifically, the central bank’s increased purchasing power causes gold prices to increase, especially in the short term. When the price of gold begins to increase, opportunities to make quick profits are opened.
Gold supply and demand in the world
Commodity prices are always affected by the law of supply and demand, including gold. When the supply of gold is greater than the demand, the excess amount of gold causes the price of gold to decrease. When the demand for gold is greater than the supply, the shortage of gold causes the price of gold to increase rapidly.
Real interest rate
The correlation between gold and real interest rates is extremely tight. Falling interest rates cause gold prices to increase. Conversely, gold prices will decrease when interest rates increase. When real interest rates change, gold prices also fluctuate accordingly.
Currency market trends
It would be a mistake if you did not pay attention to the correlation between gold and the US dollar. When the USD increases, the gold price will immediately be adjusted downward. On the contrary, if the USD falls, gold will tend to increase in price.
An effective way to invest in Gold forex – XAUUSD
Forex gold is attracting more and more traders to participate because of its fertile profits. However, like other forex commodities, investors need to be careful when investing with potential risks. Below are some of the most effective forex gold trading secrets.
Consider the XAUUSD exchange rate
When the price of the local currency increases, you can buy gold abroad quite cheaply. The reason is that, at this time, domestic gold prices do not fluctuate much. Falling gold prices are sometimes the result of exchange rate fluctuations (domestic currency/foreign currency). So don’t act hastily. Please master knowledge about certain forex rates when invest in gold online
Buy forex gold cautiously
Gold is a suitable product for medium and long-term investment. Therefore, it is difficult for investors to see gold fluctuate much in the short term. When gold tends to increase strongly, traders often buy a lot and think that gold will bring them big profits. However, gold has long-term risk-resistance properties, making the rate of return quite low. So, don’t just focus on investing in forex gold. Be careful in how you trade.
Avoid abusing leverage when investing in Gold forex
When first opening a trading account to trade gold, if they see gold suddenly increase sharply, many investors rush to place another trading order. Even using leverage to make quick profits. This is extremely dangerous. The price of gold can rise to its peak within a certain period. If the gold price does not continue to increase, there will be a sharp correction and you will lose money.
Be careful when investing gold in short-term forex
Many traders trade short-term gold by entering orders quickly and exiting quickly. They hoped to make a profit but the result was the opposite. Gold often fluctuates slightly but is stable. If you want to make a profit, you need to have good analytical skills and practice patience.
International gold is often closely related to the USD. Factors affecting the US dollar will help you analyze the fluctuation trend of gold. In the era of strong Internet development, transactions, and gold investments will be extremely safe and convenient. However, you need to learn the right trading strategy.
See more: Registering broker XTB account on the phone
Risks when investing gold in Forex
Although forex gold has many advantages over traditional gold. But gold investment forex is more risky. In particular, UK traders often face problems such as:
Risks from forex gold brokers
The number of forex brokers today is extremely large. However, most are international exchanges and are not managed or supervised by the government. Therefore, you can easily fall into a scam if you don’t research carefully.
Potential risks from the market
All political and economic issues directly affect the price of gold. Therefore, the crisis will cause gold prices to plummet. This is considered the biggest risk for investors. Losing money when gold investment forex or other forex currency pairs is a daily occurrence.
You can limit the risks when gold investment in forex by accumulating knowledge. At the same time, cultivate experience in gold trading.
Technical risks
Forex gold is traded completely online. Therefore, the risk of technical errors cannot be avoided if trading normally. The cause may come from the broker’s equipment, system, or interrupted Internet connection.
Epilogue
Above is the most basic knowledge you need to know about gold investment forex. Hopefully, this article, Learn Forex Trading can help you clearly understand forex gold trading as well as how to make money effectively with XAUUSD.
FAQ
What is the symbol for forex gold?
Gold in forex has the symbol XAU/USD.
Is Gold Investment Forex a scam?
Many people are deceived because they encounter disguised, multi-level brokers. However, if you have knowledge and research carefully, many reputable forex exchanges in the world are waiting for you. Please seriously learn about gold trading, and choose the right exchange to ensure safety and transparency.
Is Forex gold trading in the UK illegal?
The number of gold traders currently in the UK is quite large. This activity is also public because it is not subject to supervision, regulation, or prohibition. This is an international form of investment, so the State is not too strict. However, if you join multi-level forex brokers, you may be subject to administrative fines or criminal prosecution.