HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

How to Trade CFDs on Gold and Silver


Gold and silver have been chosen by traders for hundreds of years now. These metals are always in demand, especially from manufacturers of jewellery or other sectors such as the electronics or medical sectors. A metal trader can usually trade gold or silver as bullion or coin. Some traders prefer to hold physical metals to hedge against inflation or to diversify their trading portfolio. However, this way of precious metals trading is rather complicated. That’s why the most common way among traders is to trade CFDs on gold and silver. This means that they can speculate on the price of gold and silver rising or falling using a derivative (CFDs), without actually owning the asset.

What are CFDs?

A CFD refers to a contract between a trader and a broker. CFD traders speculate on the price movements of gold or silver. For example, with gold trading online, those traders that believe that the price of gold will move upwards will buy the CFD. In the opposite scenario, they will sell an open position.

By the end of the contract, the two parties involved should exchange the difference between the price of the asset at the time the contract started and the price of the asset at the end. The net difference between the two prices is settled through the trader’s trading account.

How CFDs trading on gold and silver works

To better understand how CFD trading works, traders could try opening a demo account with a broker so as to put their skills to the test within a risk-free environment. Opening a trading account with a broker also means that traders will have access to various educational materials and trading tools as well as to the latest market research and analysis. You can then:

All these come without risking any losses. Trading on a demo account is perhaps the easiest way to familiarise yourself with how the market works as well as with the factors that drive the market.

Advantages of trading on CFDs

As already mentioned above, numerous silver traders or gold traders, trade gold and silver as commodities through CFDs. The main reason behind this is that they can trade with leverage, meaning that they can trade larger positions while having a rather small initial deposit so as to potentially increase their revenue. However, there are always risks involved.

Similar to options and futures, CFDs are another derivative used to speculate on commodities prices. For instance, let’s assume that a trader opens a long CFD position on gold when its price was £1,500 and closed the position when the price reached £1,600. The price difference of £100 would then be the trader’s profit.

When traders trade CFDs on gold and silver they also need to bear in mind the costs of trading.

Factors affecting the price of gold and silver

There are numerous factors that drive the price of gold and silver. Read below to find out some ways in which the metals market is affected.

To start with, supply and demand drive the prices of all commodities. A lack of precious metals or a rise in the demand for them is what makes the metals more valuable. If, for example, there is an interruption in a big silver-producing region by political issues, then the price of silver may increase in the short term. A possible new extraction technique though could bring the opposite result. Taking another example, if there is an increased demand for metals like gold in sectors such as electronics, this could also move prices upwards.

Gold is considered a popular metal in the precious metals market. As expected, therefore, its prices are connected to other markets, such as the silver market. It is more likely that silver or platinum respond to changes in gold prices rather than the other way round. However, there are additional factors that affect the price of gold and silver such as:

Benefits of trading gold and silver with IronFX

#source


RELATED

Relative Strength Index (RSI): Unveiling Price Momentum and Overbought/Oversold Conditions

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. Developed by J. Welles Wilder, RSI ranges from 0 to 100...

Why Trade Precious Metals

Precious metals are a popular way to diversify a trader’s portfolio. They also act as a hedge against currency inflation or economic instability. Examples of the three most popular traded precious metals are gold...

What is a stablecoin?

Stablecoins play a significant role in the global cryptocurrency markets, providing a range of use cases for traders, investors, and active crypto users...

The Ultimate Guide To Stock Investing For Complete Beginners

There`s hardly a single person today who has heard about the passive income that investing can consistently bring in. There are many examples: from the great financiers...

10 Reason to Trade Forex

Foreign exchange, or more colloquially known as forex or FX, is the buying and selling of currencies to make profits based on the changed currencies' values...

InvestLite: Definition of margin trading

As margin is a widely used tool in trading, we need to understand margin definition, buying stock on margin, and how it applies in practice. This article is going to answer...

IronFX:Trading and Investing in Gold

Gold is one of the widely traded commodities worldwide, and the most popular precious metal. The price of gold can fluctuate depending on political...

Fundamental Analysis: A Beginner's Guide

Different methods are employed by investors and traders to anticipate the fluctuations in the prices of stocks, currencies, and other financial instruments...

Top Forex Trading Tips For Beginners

Want to know the best trading tips today to use to your advantage in the Forex market? This article will break down good trading tips you should consider using...

What are penny stocks?

Penny stocks, also known as “junk” stocks, are securities of small or problem-riddled companies that usually trade at a price of less than $5. They are not frequently-traded stocks...

The Strongest Currencies in the World

Have you thought about what the highest currency in the world is? Is it the US dollar, the euro, or the British Pound? No, they are not. They are the world’s most famous, most traded...

Understanding Market Stress: Navigating Economic Turbulence

Market stress is a term that has been increasingly prevalent in financial dialogues, reflecting moments of significant tension and disruption in market functionality...

A Guide to Understanding Inflation and How It Affects Traders

Inflation is becoming an increasingly important factor in our everyday lives. Google searches are up, and it has reasserted itself as a topic of popular conversation. Traders are having to familiarise...

Bullish vs. Bearish: What's the Difference?

Bull vs bear describes investment trends that have the power to impact the global financial markets. You've probably heard investors refer to a market...

Negative Balance Protection: What Is It And How Does It Work

Contract for Difference (CFD) trading is a popular form of investment, but as with any investment, it involves a degree of risk. Managing risk in trading is critical to protect your capital...

Octa broker: leveraging AI to revolutionise trading and investments

AI has already made a profound impact on the financial markets. Its ability to predict trends, execute trades swiftly, and manage risk is transforming investment strategies at its core.

Dogecoin vs. Bitcoin: Which one is the Better Investment?

Dogecoin and Bitcoin are two well-known crypto assets. However, some traders may not know how to compare Dogecoin vs. Bitcoin, so knowing some of the significant similarities and differences...

Choosing the Proper Forex Trading Strategy

A simple trading strategy is what most traders choose as a starting point. For instance, when a certain currency pair tends to come back from a particular...

Can Brokers Really Manipulate Market Prices?

The trading realm is rife with tales of broker manipulations causing devastating losses. With a plethora of platforms available, how can traders discern between genuine...

IronFX: How do I start trading forex online? A complete guide

Simply put, forex is a financial market that allows trading currencies globally. If traders believe that a currency will be stronger in value than its pair and if this is indeed the case in the end...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.