Spot Gold Trading on Forex Can Be Highly Profitable

Have you ever given a gold ring to your friend as a token of your true love? Gold has been the most precious metal from the dawn of civilization. It is still considered to be the ultimate currency and the ultimate store of value in times of political uncertainty. For the last ten years, the gold market is in a secular uptrend with the spot prices having recently breached the historical barrier of $1,200 per troy ounce. After that there was a retracement and the prices did come down to around $1,100 per ounce but this uptrend is expected to continue for sometime.

In the last decade, many investors turned towards forex after the historic crash in the stock market. Many small investors lost more than 60-70% of their saving accounts in the stock market crash. Now, forex is a great money making opportunity. It is being said that forex trading will make many millionaires in this decade.

Many people don’t know this that you can trade gold on forex too. Many forex broker platforms that you use to trade forex, allow trading of gold and silver against the US Dollar (USD) from the same platform. Both these precious metals have high demand in the industrial sector and as the global economy recovers from the recession, the prices of gold and silver are expected to skyrockets as industrial production picks up and consumers start buying again. When you trade a currency pair, you go long on one currency Gold Signals and short on the other. In other words, you simply buy one and sell the other.

In case of spot gold trading on forex, you trade one ounce of gold in the spot market against the US Dollar (USD). So just like when you trade a currency pair, when you trade gold on forex, you are taking either a long or a short position in gold against USD. There are many currency pairs that you can trade like the GBPUSD, EURUSD, UADUSD, NZDUSD, JPYUSD. Spot trading gold on forex is almost similar with gold replacing one currency in the pair and the other currency is always USD.

So, in spot gold trading on forex, you are trading one troy ounce of gold against USD. Interestingly the symbol for this is also XAUUSD with XAU representing one ounce of gold. Now, suppose the price quote in the spot market is 1100 XAUUSD. What this means is that one troy ounce of gold in the spot market right now is equal to $1,100 USD.

Just like any other financial market, the price quote in the gold spot market has got a bid/ask spread. So if the price quote is 1110/1115, it means that you can sell one troy ounce of gold in the spot market for $1,110 and buy one troy ounce of gold at $1,115 meaning you will have to pay a spread of $5 per troy ounce when trading in gold in the spot market.Spot gold trading on forex is a fast moving market and the spread keeps on changing throughout the day.

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