Guide to gold trading in Arab and European countries and best strategies for beginners
Along with oil, natural gas and grains, gold is the most traded commodity in the world. In addition, this precious metal is also one of the most interesting assets as it is used as an investment vehicle to hedge against inflation and is the number one destination for those looking for safe haven investments worldwide. In addition, gold is used in many industries such as jewelry, dentistry and some medical products, as well as cell phones and many others.
A few decades ago gold trading was very difficult because you had to buy and sell the same metal and then pay the cost of storing it. Nowadays anyone can buy and sell gold without worrying about these difficulties.
In this guide, we will tell you everything you need to know about gold trading in Arab countries, Kuwait, Arab countries, Bahrain and Qatar. We will also discuss in detail the basic factors related to investing in gold, including benefits, risks and trading strategies, and we will also recommend you the best gold trading platforms in the Arab countries and the rest of the Arab countries.
What is gold trading?
Trading gold is simply using a popular investment technique that involves gold as an investment from the perspective of the financial markets. As with other financial assets, trading gold in Arab countries involves buying and selling the commodity to make a profit in the short or long term, as well as including it in the investment portfolio as a tool to hedge against the risk of inflation or other market downturns.
Gold is considered one of the most important assets within the modern era economic and monetary system, in addition to its relative scarcity in the world enhancing its intrinsic value. Many investors resort to buying gold during times of inflationary pressures and political instability, as well as times of economic recession. There are many ways to trade gold, perhaps the most popular of which is the traditional method of buying physical gold in the form of bars, coins or jewellery. However, with the development of technology at the time of writing, many opportunities have emerged that allow the investor to buy and sell gold for speculation and profit purposes, such as contracts for difference.
Gold Trade Price:
Gold is traded in a variety of ways and in many markets, which requires an understanding of the differences between trading the precious metal in the spot market and trading it in the futures markets. The main difference between both markets is that in spot gold trading, the quoted prices represent the current value of the asset in the market, or in other words, the price you will be using to buy and sell gold at the current time. Spot gold is traded 24/7 on the inter bank markets, which are directly derived from the global over-the-counter (OTC) gold markets.
The spot gold price is the global benchmark for pricing an ounce of gold and plays a central role as a price indicator in the bullion industry.
On the other hand, gold futures contracts have different maturities, which usually cover the next 12 months. In other words, a gold futures contract allows an investor to buy and sell the precious metal at a future date at a predetermined price. Gold futures prices are typically higher than spot gold prices because of the costs involved, including storage, insurance and interest calculation.
A gold contract is for a standard quantity of the precious metal of 100 ounces and is traded in US dollars and fractions of a cent per ounce. For example, if gold is trading at $1940 an ounce, the contract value is $194,000. It is worth noting that the majority of CFD brokers offer trading in gold contracts that track spot prices, not futures.
Trading Hours for Gold:
Trading on the global gold markets (spot gold) takes place 24 hours a day, 5 days a week, allowing investors to trade the yellow metal anytime, anywhere in the world. However, the global gold market is closed between 22:00 and 23:00 GMT daily.
Methods of gold trading
As mentioned earlier, if we look at the traditional way of buying and selling physical gold, there are four main ways to trade gold. Below we look at the other three methods an investor can use to buy and sell gold on electronic platforms without having to hold or physically store the precious metal.
CFDs on Gold:
CFDs are aAlternative way to trade commodities like gold and crude oil. In simpler terms, CFDs are a form of financial derivative trading that gives you the opportunity to invest in a specific asset without actually owning it, which means that you enter into a contractual agreement with another investor to negotiate the asset’s price to speculate on commodities and not physically own them. For this reason, trading gold in the form of CFDs is considered to be one of the easiest and most cost-effective investment options, as there is no need to invest large amounts as long as there are enough funds to meet the margin requirements.
Buying and selling gold through a CFD broker also means you don’t have to pay any commissions. You can also trade using leverage, with the ability to open trades in small sizes, representing fractions of the standard contract (lot). This means that you do not need a large amount of capital to open a gold trading position compared to buying futures contracts directly on an official exchange.