Gold and precious metals trading market
Gold and other precious metals, crude oil, copper, gasoline and other commodities occupy an important position in the bulk commodity market. All are contract-traded commodities. Precious metal contracts include futures, spot, forward and options.
The intermediary for trading futures contracts is the futures exchange or the futures market. Traders from all over the world can trade about 50 major commodities, hesitating that they have extremely high economic value and durability. Gold, silver, platinum, palladium, etc. are all major trading assets. Asia is the world's largest precious metals trading market (China, India, and Singapore are the main traders of these commodities), and most of the bulk commodity transactions are dominated by European and American companies. The largest precious metal companies are in Canada and Germany.
In addition to commodities such as currency pairs and index gold, the trading of other precious metals is also very active in the futures trading market. You can trade 24 hours a day, except weekends. Generally speaking, there are two ways to trade precious metals: spot contracts and futures contracts. Spot contracts involve spot buying and selling, payment and delivery. Futures are standard contracts. Both parties agree that the buyer and seller agree on a certain amount of precious metal prices (called futures prices) for delivery and payment at a future date (called delivery date). Futures trading means that there is no actual ownership of online trading commodities.
Trading gold and precious metals
The most frequently traded precious metals are gold, platinum, palladium and silver. The high trading volume of these commodities is due to their retained intrinsic value, regardless of economic conditions. In recent decades, the preference for buying precious metals as long-term investment commodities online, and even physical ownership, has increased significantly. Trading precious metals also provides opportunities for those interested in short-term investments, because derivatives and exchange sales contracts are a capital-intensive and simple way to make profits through price changes.
Unlike most commodities that depend on the level of production and consumption, gold trading prices are not like this: they follow the pulse of political change, making gold sometimes act as a safe-haven market. As gold, platinum, palladium and silver also become valuable assets, investors see them as a store of value when the market is unstable.
There are several factors that affect price volatility and may cause volatility in the precious metals market. One of the most important factors is the global financial institutions, whose investment is speculative in nature and may lead to upward or downward price changes. Another factor that affects the market is the trend of end users, which is mainly triggered by jewelry buyers: the demand for jewelry makes the market price of precious metals rise. The economy also has an impact on market prices. In well-performing economies around the world, the level of wealth is directly related to the demand for gold and other precious metal jewelry: when investors look for investment options with higher investment risks, the price of certain precious metals will decrease, while other prices will increase. In addition, changes in demand for financial assets other than precious metals also contribute to price fluctuations.
Summary of the trading history of gold and other precious metals
Precious metals, especially gold, have always been a symbol of wealth. In prehistoric times, gold was used for exchange. For centuries, whether in the form of coins, gold bars, or gold ingots of fixed purity and weight, gold has always been a valuable and sought-after asset. The first coin was in 600 BC, and currency exchange (standard gold) was used for 30 years. As a metal with high conductivity and ductility, gold does not react with other elements, and it is used in the jewelry industry, commercial chemistry, and electronic medicine. Gold as a currency was only replaced by the Fiat Monetary System after 1976, but to this day, it still maintains a solid investment asset.
Like gold, silver has been used for currency exchange for more than 4,000 years, and silver continued into the nineteenth century. Industrial, commercial and consumer demand make silver a powerful asset for investment, and derivatives such as silver futures are traded on different exchange markets around the world. With the advent of online trading, it provides investors with an easy way to get the price of silver.
Compared with gold trading and silver trading since ancient civilization, platinum and palladium have a shorter history in the financial field. However, due to their scarcity and annual production, as well as their various uses in several industrial fields, sometimes they tend to be higher in price than gold, and may reach 10 times the price of gold. Platinum is related to wealth, and the white gold-platinum alloy is the civilization that discovered the American continent as early as Columbus. The first mention of platinum in Europe was in the 16th century. Since the 18th century, it has been used in jewelry, electrical machinery, chemicals, dentistry, and even medicine.
Similar to platinum, palladium also plays a crucial role in technology. Since its discovery in Europe in the 19th century, the global demand for palladium has increased substantially, mainly in the automotive industry, but it has also been widely used in the pharmaceutical, electrical and jewelry industries. Also used as an investment asset. Due to supply and demand (that is, the price-determined market), in the era of sustained economic stability, the price of platinum and palladium can be the same as or even higher than that of gold, and in periods of economic instability, the price of platinum and palladium will be lower than that of gold, making gold Become a more stable precious metal when investing.
Gold and precious metals trading today
Since the 1970s, in addition to foreign exchange currency pair (foreign exchange) transactions, precious metals have become the most popular investment commodity, and the period of inflation or economic/political uncertainty is based on portfolio risk management. Long-term investment in gold and other precious metals is a popular investment method all over the world.
Futures contracts are so-called derivative contracts, meaning that their value comes from the performance of the underlying asset. One of the main purposes of investing in precious metal futures is risk mitigation: given the ability of contract buyers and sellers to advance future transactions at a fixed price or interest rate, they can both ensure drastic or sudden price changes that may lead to increased losses.
The trading of precious metals can be said to be two-way: if the market is expected to rise (upward trend), the transaction can be sold through the purchase of futures contracts (long) and export trade; and if there is an expectation of downward movement (downward trend), the transaction can be passed Sell futures contracts to enter (short) and export trades through purchase contracts. It is also possible to trade multiple futures contracts, which includes making several separate entries and exports, that is, entering the contract at different prices, exiting at one price, or vice versa. Whether it is an upward or downward market trend, the ability of both parties to trade allows investors to make profits.
