What are the ways to day trade gold?

June 8, 2022
Want more cloneable templates and assets? Visit flowbase.co

Gold is one of the oldest currencies, and it has become profoundly ingrained in the consciousness of the financial world.

The stat taken inDecember 2019 ranks the top significant financial assets globally by the average trading volume each day. At $145.5 billion, gold is ranked third with the average trading volume in a single day.

You may wonder what the reason behind this enormous trade of gold is. 

The answer has something to do with the phenomenon of gold hedging. Other valuable metals and gold negatively correlated with the assets and bonds depending on the current economic stability. This adds to the perception of the precious metals as asafe way to refuge for the investors.

In this guide, we’ll talk about what are some of the ways to day trade gold.

What makes gold move?

Gold manages to drawthe attention of many people having many interests. Gold bugs collect the physical bullion and invest a significant amount of their assets in the gold stock market and futures.

The more substantial percentage of the gold bugs are the retail investors, and a small portion oftheir funds and assets is solely invested in the gold stock and market.

Gold bugs offer a constant flow of buying demand when the average prices are lower. As a result, they add substantial liquidity while limiting the low gold futures and stock value. This phenomenon attracts significant and vital hedging activity from institutional investors. 

The metal assets respond to a small number of different price triggers. And as a gold trader, you must have know-how about these prominent factors. These factors are

·        Supply and demand

·        Greed and fear

·        Inflation and deflation

Generally, gold prices change due to economic, political and social unrest. Therefore, gold trading is often known as safe heaven since its price is not necessarily affected by any government policy influence or is not inflated by the interest rates like the shares in the stock market.

Therefore gold can serve as insurance for the people who invest in it and liquidate their gold assets.

What is gold day trading?

Day-trading gold is a speculation on short-term price movements of gold. It all takes place in an electronic environment.

The physical gold is not handled and is not taken into possession. Instead, the transactions takeplace, as mentioned earlier, in an electronic environment. Only the profit and loss are reflected and shown in the trading account.

Price movement is the key to making a sweet return in the gold trading market for the day traders. In most cases, gold flows in a specific trend in the gold market. The trader's responsibility is to find these trends and enter the rightful position.

There are many ways today trade gold. Some of them include;


Gold can be traded incertain different ways. The most common trading practice is the futures contract.

A futures contract is an agreement to buy or sell gold in the future; it also implies that there is no need to take the gold's physical ownership while accepting the gold futures.

Day traders close allthe trades daily and gain benefit from the difference in the price between where they bought their gold contract and where they are going to sell it. COMEX is an exchange where all the future gold trades are traded. 

Gold moves in $0.10 increments in the future trades. The slightest fluctuation in the futurecontracts is referred to as a 'tick'. The number of ticks the price moves away from the entry price when purchased or sold determines your loss or profit inthe gold trade.

The tick value of a standard contract is $10, and a micro contract is $1.

The micro gold future(MGC) has a $1 tick value because this contract represents around 10 troy ounces of gold, and 10 ounces multiplied by the tick size is $0.1; the result is $10.

The standard gold future (GC) has a $10 tick value and is 10 troy ounces of gold because thiscontract represents around 100 ounces of gold, and 100 ounces multiplied by the tick size is $0.1; the result is $10.

The future broker determines how much money is required in the account to start the day trading of a gold futures contract.

The intra-day marketis the amount demanded by the broker to open the daily day trade market of the gold futures trade, and it changes from time to time.

These values are based on each day's day trading and closing positions before the market is closed.

Day trading through stocks 

Stock exchange trading funds such as the SPDR Gold Trust (GLD) are another option for the day trading gold. The SPDR gold trust trades at around the tenth percent of the amount of gold. 

If the trader has a stock trading account, the gold's price movement can also be traded. As the SPDR trust keeps gold in reserves, the value fluctuates with the gold price.

If the gold price futures are trading at $1000, the gold trust will be trading at $100 (as it is 1/10thof the total gold price). Trust is also sold in the same way as stocks. As the minimum cost of movement is $0.01, you lose or win $0.01 for each share you currently hold each time the price changes by a penny.

The best time to trade through stocks

The day traders who want to gain a maximum profit from the XAU/USD focus on the busiest hours calculated by the significant trading volume.

Around 10:00 am – 6:00pm (EST) is when the maximum volume of gold is traded in the market. However, traders should not overlook the events that have a noticeable and significant impact on price swings in the gold trust.

Final thoughts

While trading gold,there is no calculated or unified profit guaranteed. The entire business plans and trading strategies influence the outcome of the daily trade.

The gold day trading has the trading potential to help the trader make a fortune and remember that it is not loss-free trading. It also involves a high-risk possibility of loss in daily trading due to certain factors.

Other posts

Need Help? Speak to our Telegram Bot!

speak now