Spread Betting on Gold – What Next For the Precious Metal?
November 30, 2009 6:30 pm
But what affects the price of gold? Can the recent rally be sustained? And how can financial spread betting help you profit from fluctuations in the value of gold?
Traditionally, gold has been seen as a safe haven during periods of economic turmoil. This is partly thanks to the perception that a physical commodity will hold its value better than an investment in less tangible markets such as forex or equities, both of which can tumble dramatically on negative economic data.
On the other hand, high gold prices can impact negatively upon the jewellery market, an area which still makes up around 70% of physical demand for gold. Plus, of course, there is the fact that the recession seems to have reached its nadir and stock markets, individual shares and forex may all start to increase their appeal for investors. Both factors may drive the price of gold down again.
However, with interest rates sitting at all-time lows in the UK and low rates across the eurozone and the US, many investors now fear the prospect of inflation – a side effect of a sudden upturn. An investment in gold is one of the most sure-fire ways to hedge against the spectre of inflation. Vast levels of government debt can also hit currency markets and cause traders to turn towards gold. This could see prices carry on their upward trajectory.
Then again, there is the question of how far beyond the $1000 per ounce mark the price of gold can rise. When it hit similar levels six months ago, the market was unable to support much further gain.
Whether you think the market is set to rise or fall, financial spread betting is the easy, tax efficient* way to profit from the price of gold.
Spread betting lets you take a position on a whole range of markets, including stock indices, currency pairs and a range of commodities. You can also use Stop orders to limit the risk of large losses while keeping your potential profit uncapped. The other major advantage of spread betting is that you can trade in small lot sizes, allowing you to speculate while keeping your risk to a minimum.
However, spread betting is not suitable for everyone and can result in losses that exceed your initial deposit, so before starting make sure you fully understand the risks.
But what affects the price of gold? Can the recent rally be sustained? And how can financial spread betting help you profit from fluctuations in the value of gold?
Traditionally, gold has been seen as a safe haven during periods of economic turmoil. This is partly thanks to the perception that a physical commodity will hold its value better than an investment in less tangible markets such as forex or equities, both of which can tumble dramatically on negative economic data.
On the other hand, high gold prices can impact negatively upon the jewellery market, an area which still makes up around 70% of physical demand for gold. Plus, of course, there is the fact that the recession seems to have reached its nadir and stock markets, individual shares and forex may all start to increase their appeal for investors. Both factors may drive the price of gold down again.
However, with interest rates sitting at all-time lows in the UK and low rates across the eurozone and the US, many investors now fear the prospect of inflation – a side effect of a sudden upturn. An investment in gold is one of the most sure-fire ways to hedge against the spectre of inflation. Vast levels of government debt can also hit currency markets and cause traders to turn towards gold. This could see prices carry on their upward trajectory.
Then again, there is the question of how far beyond the $1000 per ounce mark the price of gold can rise. When it hit similar levels six months ago, the market was unable to support much further gain.
Whether you think the market is set to rise or fall, financial spread betting is the easy, tax efficient* way to profit from the price of gold.
Spread betting lets you take a position on a whole range of markets, including stock indices, currency pairs and a range of commodities. You can also use Stop orders to limit the risk of large losses while keeping your potential profit uncapped. The other major advantage of spread betting is that you can trade in small lot sizes, allowing you to speculate while keeping your risk to a minimum.
However, spread betting is not suitable for everyone and can result in losses that exceed your initial deposit, so before starting make sure you fully understand the risks.
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