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Spread Betting on Gold |
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Where to Spread Bet on Gold
You can spread bet on Gold with the following companies:
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| Gold (spread size) |
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| Commodities (min stake) |
£1 |
£1 |
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£1 |
£0.50 |
£0.50 |
£1 |
| Commodities (more available) |
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Commodities spread betting may also be available with other companies - notes.
Gold Spread Betting - Market Review
Spread Betting on Gold - 21 May 2012
Gold continued its rebound on Friday, gaining $18.73 to $1,592.90 as bargain hunters came into the market.
The weaker US currency was the main reason behind the rally, as it made the dollar denominated gold market look cheaper.
It’s also possible that some investors took a second look at the Fed’s recent choices and decided that QE3 is still a possibility.
Spread Betting on Gold - 18 May 2012
Gold's safe haven status was clear in yesterday's commodities trading, with the precious metal posting one of its highest gains for the year.
The boost came from the extremely poor Philadelphia Fed manufacturing figures, which struck a chord as the market was not expecting a weak reading.
The $35 gain to $1,573.0 followed on from heavy selling earlier in the week as gold was weighed down by a rallying US dollar. Currently the precious metal is trading at $1,574.
Spread Betting on Gold - 17 May 2012
In commodities trading, yesterday gold hit new lows for the year at $1,527 an ounce before staging a modest comeback to close at $1,540.
The precious metal initially saw downside pressure as Greek turmoil kept safe heaven flows going into the US dollar. However, the FOMC minutes hinted that, given the state of the global economy, the Fed was becoming more open to another round of easing. This sent the dollar down and gold up.
Spread Betting on Gold - 16 May 2012
Gold continued to fall as traders dumped risky assets and piled into the safety of the US dollar. The gold spread betting market traded as low as $1,541 an ounce.
With little technical support seen until $1,531, and no turn around in Greece on the horizon, the downward trend looks set to stay firmly in place.
Spread Betting on Gold - 15 May 2012
Gold prices suffered yesterday, falling $21.84 to trade at $1,557 an ounce, as risk aversion sent traders piling into the dollar.
Gold had previously been the asset which traders jumped into during moments of uncertainty. However, it has recently caught some traders off guard by recoupling with other commodities and returning to its inverse relationship with the dollar.
Spread Betting on Gold - 14 May 2012
Gold futures continued to slide on Friday as risk aversion sent more traders fleeing into the safety of the US dollar.
The recent rush into dollars has seen the gold market reach new lows for the year.
Spot gold also fell 0.8% to $1,580.25 an ounce, shedding 3.7% on the week. This morning that weakness is continuing, with the precious metal at $1,570.
Spread Betting on Gold - 11 May 2012
Buyers returned into the gold market yesterday, albeit at a cautious pace. They pushed the price of the precious metal higher and interrupted a streak of three consecutive declines.
However, the gain of $2.42 to $1,592.42 hardly changed anything in the overall downside trend, despite some better news coming out of Greece.
Investors could now be trying to assess how long it will take for gold to be back in favour.
Spread Betting on Gold - 10 May 2012
Yesterday, spread trading investors discarded gold and looked for safety in the US dollar and Japanese yen.
It seems that the precious metal has lost some of its safe haven appeal lately, however it will be interesting to how it performs if Greece leaves the euro.
Could there be forced selling to cover margin calls elsewhere, or will there be a wave of buying as a hedge against market turmoil?
For now, gold has moved below $1,600.00, losing $16.33 to $1,588.86.
Spread Betting on Gold - 09 May 2012
Mirroring the sell off in equities and the euro, gold also posted a steep decline as the developments in the Greek political arena threaten to reignite the European debt crisis.
Sentiment is becoming more and more pessimistic. Even gold’s safe-haven status isn’t enough to attract investors, they are heading for the US dollar instead.
The drop of $33.57 to $1,604.39 took the daily gold market through support at $1,612. At the time of writing, the metal is below the psychologically important $1,600 level at $1,591.
Spread Betting on Gold - 08 May 2012
Gold also remains in recent trading ranges, albeit near the bottom. For those of you who love long-term momentum, the last two big rallies failed to make new highs. This has not happened for some time.
It seems as though previous peaks are getting harder and harder to overcome. That said, there also seems to be virtually no appetite for selling below the $1600 level.
With the price at $1626, we can anticipate buyers coming in very soon. It will be interesting to see whether they can achieve the same results as in previous attempts.
Spread Betting on Gold - 04 May 2012
Gold extended its losses for a third day in a row, ending $17.54 down at $1,635.98.
This came as the ECB President denied talks of a cut in interest rates. It sounded like the ECB are sticking to their mandate of caring less about growth and more about inflation.
Gold spread betting investors took notice of Draghi's comments and moved away from the precious metal, even though today's US employment data might see them move back. At the time of writing the precious metal is just softer at $1,632.
Spread Betting on Gold - 03 May 2012
Bad news for the US employment sector spurred demand for the dollar, which in turn put downward pressure on the gold market.
As a result, gold prices took a hit yesterday, losing $9.2 to $1,653.60. The precious metal is still feeling the effects this morning by trading lower at $1,646.
Spread Betting on Gold - 02 May 2012
Gold finished slightly lower yesterday, losing $1.65 to close at $1,662.80. This largely came on the back of the positive US manufacturing data, which sent investors back into risky assets.
Doubts that the Fed will employ another round of quantitative easing have also reduced demand for gold as a hedge against weaker US monetary policy.
Considering the bigger picture, the $1,620 - $1,680 range established last month is still in place. At the time of writing the precious metal is at $1,651.
Spread Betting on Gold - 01 May 2012
The commodities markets saw a sharp sell off in gold yesterday which left everyone wondering about a so-called 'fat finger error'.
It was serious enough that trading was halted to allow 'the market to recalibrate', according to a CME spokesperson.
For the rest of the day, gold fought its way back up and closed $1.45 higher at $1,663.88.
Spread Betting on Gold - 30 April 2012
Following the weaker than expected US growth figures, many commodities investors took the view that the Fed will increase its current monetary easing program.
As a result, the gold market continued its rally with the precious metal ultimately gaining $4.9 for the day, rising to $1,662.3.
Spread betting and CFD trading carry a high level of risk and you can lose more than your initial deposit so you should ensure spread betting or CFD trading meet your investment objectives and if necessary seek independent advice.
Market Commentry from Financial Spreads.
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Financial Spreads - tax free* trading on over 2,500 spread betting markets. With a Financial Spreads Account you can trade commission free, 24 hours a day on stock market indices, forex, shares commodities and...read review » Financial Spreads.
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Introduction to Gold Spread Betting
When it comes to financial spread betting, Gold is the most traded metal and one of the most traded commodities.
Historically, Gold has been seen as a lower risk investment because the yellow metal is thought to hold its value, even during uncertain economic times. In fact, for a long time, Gold was used as the main base currency when trading other commodities for this exact reason.
When markets are looking more volatile many investors prefer to take their money out of what are typically thought to be riskier markets, such as forex and equities, and re-invest in Gold.
Even in relatively stable times, Gold trading continues to play a significant role in many portfolios.
Financial spread betting can be a useful tool for an investor who is considering trading on Gold. It allows tax free*, leveraged trades. You can also speculate on the price of Gold to go up or down. However, whilst the leverage can allow for larger profits, it can also lead to losses in excess of your initial investment. If you are looking to spread bet on Gold you should only do so after comprehensive research. Where necessary you should seek professional advice.
Looking at the supply of Gold, note that mine production, which has historically accounted for 60% of the world’s Gold has consistently fallen since 2001. Having said that, due to new mines, China has been able to increase its output of the metal.
Despite the historical viewpoint there are still contradictory opinions on Gold:
- Gold is considered to be a long-term hedge against inflation. That has been empirically justified by research from the World Gold Council in June 2006.
- Simon Denham of Capital Spreads however is not a fan, "In the end Gold is just a pretty, useless, yellow lump of metal. Too valuable to actually use for anything and costly to own. In times of trouble it has safe haven value but in good or even in just-slightly-bad times, it is of little worth as a long term investment".
Whatever your point of view is on the metal, Gold can be an interesting market to trade and it sees some impressive price movements:
- During 2007 it started trading around $605 per troy ounce before ending the year at $898
- In March 2008, the yellow metal traded as high as $1,028. At other points in the year, Gold was seen as low as $681
- During February 2009, Gold again broke through the $1,000 mark to trade up to $1,006 per ounce. The metal then dropped back to $864 in April 2009
- Throughout 2009 and 2010, on a given day, the price of Gold could easily swing by $10-20
- In February 2010 the metal traded as low as $1,043. However by October 2010 prices were at record highs in excess of $1,300
- In August 2011 gold breached the $1,900 level
How to Spread Bet on Gold
Let's say you want to financial spread bet on Gold, so you look at a spread betting website, e.g. InterTrader, and see the real-time market price of:
Here's what you can expect from a trade.
| The Market: | Gold Rolling Daily |
| The Spread: | $1,801.3 - $1,801.7 |
| How the Spread Works: | You can trade on the Gold Rolling Daily market to go:
 Above $1,801.7, or
 Below $1,801.3
This is a Rolling Daily spread bet and so there is no expiry date for this trade. If you haven't closed your position and the session ends then your position will roll over into the next session.
If a trade is rolled over then you will either be credited or debited for overnight financing based on whether you are betting on the market to go up or down.
For more details also see Rolling Spread Betting. |
| Points Traded: | Trades on the Gold market are priced in £x per $0.1.
Where $0.1 is 10¢ of the commodity's price movement.
E.g. if Gold moves $4.00 then you would lose or gain 40 times your stake. |
| Stake: | You work out how much you want to stake per $0.1, e.g. £2 per $0.1, £3 per $0.1, £5 per $0.1, £10 per $0.1 etc. |
| Short Staking Exercise: | For example, if you have a stake of £2 per $0.1 and Gold moves by $2.60, you would win/lose £2 per $0.1 x $2.60 = £52. |
Spread Betting Example | Buying Gold
Online spread betting on the commodity to increase
| You Now Decide to Buy or Sell: |
Gold going:
Above $1,801.7? or
Below $1,801.3?
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| You Might Choose to Go Long: |
Above $1,801.7 |
| You Choose Your Stake Size, Let's Assume You Choose: | £1 per $0.1 |
| So What Next? |
- You will make a profit of £1 for every $0.1 Gold moves higher than $1,801.7
- Your will make a loss of £1 for each $0.1 Gold moves lower than $1,801.7
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| When Speculating on a Market to Go Up Your Trading P&L = | (Closing Price - Opening Price) x stake per $0.1 |
| | |
| Example 1 | Gold rises and the gold spread betting market is moved to $1,812.5 - $1,812.9. |
| Close and Take a Profit? | At this point, you could opt to keep your position open or close it to lock in a profit. In this case you opt to take your profit. Therefore, you close your spread bet by selling at $1,812.5. |
| Your Trading P&L = | (Closing Price - Opening Price) x stake per $0.1 |
| ($1,812.5 - $1,801.7) x £1 per $0.1 |
| $10.8 x £1 per $0.1 |
| Your Trading P&L = | £108 profit |
| | |
| Example 2 | Gold falls and the spread betting market is revised and changes to $1,790.0 - $1,790.4. |
| Limit the Loss? | You can choose to keep your gold bet open or close it and restrict your losses. In this example you decide to close your position by selling the market at $1,790.0. |
| Your Trading P&L = | (Closing Price - Opening Price) x stake per $0.1 |
| ($1,790.0 - $1,801.7) x £1 per $0.1 |
| -$11.7 x £1 per $0.1 |
| Your Trading P&L = | -£117 loss |
Fully Worked Trading Example | Going Short of Gold
Spread betting on the metal to decrease in value
| You Now Choose to Go Long or Short: |
Gold to move:
Above $1,801.7? or
Below $1,801.3?
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| Let's Assume You Want to Go Short: |
Below $1,801.3 |
| You Choose Your Stake, Let's Say You Select: | £2 per $0.1 |
| What Happens Now? |
- You lose £2 for each $0.1 Gold pushes above $1,801.3
- You win £2 for each $0.1 Gold drops below $1,801.3
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| If You Are Speculating on a Market to Decrease Your Trading P&L = | (Opening Price - Closing Price) x stake per $0.1 |
| | |
| Example 3 | Gold moves lower and the financial spread betting market adjusts and moves to $1,794.4 - $1,794.8. |
| Lock in Your Profit? | You may opt to leave your gold trade open or close it and lock in a profit. For this example, you decide to close your trade by buying the market at $1,794.8. |
| Your Trading P&L = | (Opening Price - Closing Price) x stake per $0.1 |
| ($1,801.3 - $1,794.8) x £2 per $0.1 |
| $6.5 x £2 per $0.1 |
| Your Trading P&L = | £130 profit |
| | |
| Example 4 | Gold moves higher and the gold market is adjusted and moved to $1,807.9 - $1,808.3. |
| Time to Limit the Loss? | You can choose to let your spread bet run or close it and restrict your loss. In this case you choose to close your trade by buying at $1,808.3. |
| Your P&L = | (Opening Price - Closing Price) x stake per $0.1 |
| ($1,801.3 - $1,808.3) x £2 per $0.1 |
| -$7.0 x £2 per $0.1 |
| Your P&L = | -£140 loss |
Gold Notes:
- Financial spread betting quote taken from InterTrader: 15 September 2011
- Gold is traditionally priced in dollars per troy oz
- Most spread betting companies will also allow you to speculate on Gold in euros per $0.1 and US dollars per $0.1
- Spread betting also allows you to gain access to a large variety of other markets, for more details please see:
Where can I find Gold Charts and Real-time Gold Prices?
Where to Trade Gold Tax Free*
You can speculate on Gold tax free* with the following spread betting companies:
The Gold Market
Gold was once dismissed by the economist John Maynard Keynes as a "barbaric relic" although over the last three years the metal has surged in value.
Since the September 2008 lows of $682.50, the barbarous relic has hit record highs in excess of $1,900 against the US dollar. There remains the potential for more gains to come as governments and central bankers keep digging themselves ever bigger holes.
Not only has gold surged against the dollar, but it has also surged to record highs against both the euro and sterling as investors look for a safe haven from the devaluation of fiat currencies.
As mentioned above, one of the key arguments used by the critics of the gold bulls has been that the metal has zero yield and has no purchasing power. Even central bankers have had their say, with US Federal Reserve chairman Ben Bernanke answering a question by announcing that ‘gold is not money’.
On the other hand, if you look at the commodity since the previous peaks of 1980 the metal has actually underperformed relative to inflation. That suggests that there could well be more upside for spread betting investors.
One of the main criticisms of gold has been that it offers no yield, although you could make the same argument for many major currencies at the moment. Sterling, the Japanese yen, Swiss franc and US dollar all currently have negative interest rates.
Over the last three years the metal has outperformed the US dollar, the euro and the pound which are all down by more than 10%. Gold is up by more than 100%.
According to Michael Hewson of CMC Markets, "The key reason gold is becoming an attractive investment is it cannot be printed, adjusted or manipulated to the whims of central bankers and governments. This suggests that the potential for a rise to $2,500 looks ever more possible".
Although if you are thinking of spread betting on gold to rise then a word of caution. Even if gold does continue its rise, which is certainly not guaranteed, there could be large pull backs along the way. For example in August 2011 there were days when the metal dropped by $70 and even $100 in a single day.
The Gold Market, original article written 25 August 2011.
With financial spread betting you can lose more than your original stake or investment. Spread betting carries a high level of risk to your capital. Please familiarise yourself with the risks that are involved and before trading, ensure that financial spread betting matches your investment objectives. Seek independent advice where necessary.
Spread Betting on Gold - edited by MJ, 21 May 2012.
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With spread betting you can lose more than your original stake or investment. Spread betting carries a high level of risk to your capital so please familiarise yourself with the risks that are involved and, before trading, ensure that spread betting matches your investment objectives. Seek independent advice where necessary.
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* Based on current UK tax law. Tax law may change and can differ depending on your personal circumstances.
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