Gold trading is on the rise as the precious metal could reach record highs in 2024.But why is gold so significant as a global store of wealth and medium of exchange?In this article, Finbok delves into the fascinating world of gold trading and answers all of your burning questions about the precious metal on the worldwide market.

Gold Trading: Fundamentals

The primary issue with gold trading is that, unlike other commodities such as oil or wheat, it is neither depleted nor used. Gold is still found all over the world once it is extracted.The oil that’s used in your car is burnt up the second you turn on your ignition.Gold, on the other hand, is used to create art, bars, jewelry, and technical components.Regardless of where gold ends up, its chemical composition ensures that it will never be depleted—it is permanent.As a result, supply-demand, which works for commodities like oil and wheat, does not apply to gold trading.

Gold Trading – Forecast for March 2024

Gold was on the verge of setting a new record high above $2,100 when it suffered a technical correction. However, the selling pressure on the USD and declining US Treasury bond yields allow XAU/USD to hold onto significant daily gains above $2,030.Technically speaking, the overnight growth validated the breakthrough of the $2,062-2,064 barrier in the first week of March, supporting the possibility of further increases.The gold price is still expected to rise beyond the $2100 intermediate barrier and reach the all-time high, which was last reached in the $2,144–$2,145 range in early December 2023.The $2,100 figure appears to guard against any short-term decline.

Gold Trading: Fundamental Overview: March 2024

All eyes will be on the US Nonfarm Payrolls (NFP) report on March 7 as it will affect the US Dollar (USD) and give the metal a new lease on life.Meanwhile, increasing consensus that the Fed will begin reducing interest rates in June keeps USD bulls on the defensive and supports the unwavering price of gold.In the meantime, investors’ desire for riskier assets is tempered by ongoing geopolitical tensions and worries about a downturn in China.This is demonstrated by the generally negative sentiment around the equities markets, which is thought to be another factor supporting the safe-haven XAU/USD. Today, traders use the US ISM Services PMI to identify short-term buying opportunities.Gold Trading ETFsAmidst anticipations of impending reductions in U.S. interest rates, gold is drawing the attention of investors as it nears a new peak.Gold’s popularity has increased after a string of dismal U.S. economic reports.Gold has historically been seen as a safe haven during times of economic uncertainty and low-interest rates.On March 4, the price of bullion surged past $2,100 per ounce, moving toward the record high of $2,135.39.As a result, trading in the gold ETF market has soared. Since metal miners operate as a leveraged play on the underlying metal prices, they typically see greater gains than their bullion relatives in a rising metal market, making them the biggest winners of the surge in the price of gold.The most impressive mover was the 5.3% leap in Sprott Junior Gold Miners ETF SGDJ during the trading session on March 4.Other top performers included the iShares MSCI Global Gold Miners ETF RING, VanEck Junior Gold Miners ETF GDXJ, Sprott Gold Miners ETF SGDM, and VanEck Gold Miners ETF GDX, all of which saw gains of more than 4%.Rising interest rates in the US weaken the US dollar and raise the opportunity costs of keeping non-yielding bullion, which makes gold extremely susceptible to these changes.With the dollar and US Treasury yields falling, the yellow metal gained 2.3% last week—its biggest weekly gain since 2024 and second consecutive week of gains.

Gold Trading: Here are the top ten facts about gold!

1. Gold is a good value store against a depreciating currency. 2. The majority of Earth’s gold is derived from meteorites that blasted the planet more than 200 million years after its formation. 3. The element symbol for gold trading, Au, comes from the Latin word “aurum,” which means “shining dawn.” 4. Gold is incredibly ductile, with one ounce capable of creating a five-mile thread for use in needlework.5. Gold is the most malleable element, with one ounce capable of being hammered into a 300-square-foot transparent or greenish-blue sheet. 6. Despite its size, gold is generally safe, though it may be allergic to some people. 7. Gold purity is assessed in karats, with 24-karat gold considered pure. Common alloys, such as 18-karat gold, are 75% pure, with the remainder usually being silver or another metal. 8. Gold is a noble metal that can withstand oxidation, dampness, and acidic conditions. To dissolve gold, a special acid mixture known as aqua regia is necessary.9. Aside from its symbolic importance, gold is used in a multitude of industries, including electronics, dentistry, medicine, radiation shielding, and glass coloring.10. High-purity metallic gold has no odor or taste, indicating that it is unreactive, as opposed to other metallic elements and compounds that do.

Gold Trading: How to Start

There are several ways for investors to gain exposure to gold. It is possible to invest directly in gold bullion, but the costs of storing and insuring actual gold can be significant.Investors can also purchase shares of mining companies whose stock prices are linked to the price of gold or exchange-traded funds (ETFs) that hold the precious metal.The stock market is the most straightforward way to gain exposure to gold, as it allows you to invest in the shares of gold mining companies.Investing in gold bullion does not offer the same leverage as investing in gold mining stocks.As the price of gold climbs, miners’ higher profit margins can boost earnings significantly. Assume a mining company makes a $200 profit when the price of gold is $1,000.If the price rises by 10% to $1,100 per ounce, the gold miner’s operating margin increases to $300, representing a 50% gain.Of course, other variables to consider when investing in gold mining stocks include political risk (many are headquartered in developing countries) and the difficulty of maintaining gold output levels.

Gold Trading: Analysing its history

Gold trading prices are governed by a complex collection of variables. Because gold is valued in dollars, the value of the US dollar can significantly affect its performance.A strong dollar makes gold more expensive for buyers in foreign countries, potentially leading to lower gold prices.A weaker dollar, on the other hand, makes gold more accessible to international buyers, perhaps causing price hikes.Because gold is seen as a hedge against inflation, the value of fiat currencies, as well as market expectations of inflation, can affect gold prices.These factors seem to be reflected in the yellow metal’s recent price history.Despite growing inflation, gold prices declined throughout the bulk of 2022, perhaps due to the dollar’s ongoing strength versus other currencies.More recently, with inflation persistently persisting despite the Federal Reserve’s efforts to control it, gold prices have risen to more than $2100 per ounce in March 2024, up from around $1,975 per ounce in January.

Biggest contributors to gold’s value

Gold serves as a hedge against the declining value of currencies owing to inflation, encouraging many investors to consider gold as an alternative commodity and a means of protecting their cash.What is the gold standard?Under the gold standard, a currency’s value is tied to the price of gold.The Bretton Woods Agreement, which laid the groundwork for global currency markets following World War II, stipulated that the US dollar was convertible to gold and that other foreign currencies were valued in proportion to the dollar.In 1971, President Nixon abolished the dollar’s convertibility to gold, essentially terminating the gold standard.

Gold Trading – A hedge against inflation

While gold is a reliable hedge against inflation, it is far from the sole one. Commodities benefit from inflation because they have pricing power. When investing in commodity-based businesses, the most crucial consideration is to choose low-cost producers.More conservative investors should look at inflation-protected assets, such as Treasury inflation-protected securities, or TIPS. The last thing you want to do is sit idle—in cash, believing you’re doing well—while inflation erodes the value of your currency.

Gold Trading: The Bottom Line

Gold has had a particular position in the human imagination since the beginning of written history. Gold is tempting as an investment because of its capacity to remain strong during difficult economic times and hedge against inflationary losses in the value of fiat currencies.Although the US dollar and other world currencies are no longer linked to gold, as they were when many countries followed the gold standard, the precious metal is nevertheless important to the global economy.

Gold Trading in South Africa: Advantages of Trading with Finxo in 2024

Regulatory Compliance and Security: Finxo adheres to strong regulatory rules to ensure a secure and transparent trading environment.Cutting-Edge Technical Integration: The platform incorporates the most recent technical advancements, enabling quick and informed trading decisions.Diverse Asset Offerings: Traders can select from a wide choice of trading instruments, allowing them to diversify their portfolios and capitalize on numerous market opportunities.Educational Resources and Support: Finxo offers extensive educational materials for both new and experienced traders, as well as exceptional customer service.Advanced Risk Management Tools: The platform contains sophisticated tools for effective risk management, which is a key aspect of trading, especially during volatile periods like earnings season.Competitive Spreads and Low Fees: Finxo offers competitive spreads and low fees, which are crucial for maintaining profitability, especially among frequent traders.Community and Networking Opportunities: The platform features a trader community, which allows for networking and strategy sharing, enhancing the overall trading experience.Continuous Innovation: Finxo’s services are regularly updated to ensure that traders have access to the most recent and efficient trading tools and information.