Gold is simply a commodity, such as crude oil or sugar. Commodities can be traded as physical properties in their own right, in which case your trades actually result in ownership of an amount of gold, oil, sugar and so on. You can also speculate on the price of spread betting, trading CFDs and other financial derivatives markets.

Gold and other commodities are typically traded as futures contracts. A futures contract is a two party agreement to buy or sell a commodity at a predefined date, also known as the expiry date. Futures contracts are traded on futures exchanges and are a type of financial derivative, deriving their value from prices in the underlying commodity market ufabet.

A futures contract differs from a futures option. The former obliges the holder to buy or sell the contract on the expiry date, irrespective of the current value of the contract. As such is therefore a risky side to futures contracts, in that a trader speculates on the price of gold or other commodities that may turn out to be incorrect. An option gives the holder the right to not buy or sell the contract on the expiry date, instead they have an option of paying a pre-agreed fee for not concluding the contract.

The price of gold, just as other commodities, can fluctuate over time. Gold is one of the longest continuously traded commodities in the world and its price is determined by supply and demand like most commodities. However it’s also affected by investors speculating on it through products like ETFs and gold spread betting. Gold, however, differs from many other commodities in that it is not necessarily consumed / used.

The gold price is significantly influenced by the interaction of large institutions, including national central banks and the IMF (International Monetary Fund). Central banks are among the largest single holders of gold. These holding are usually referred to as gold reserves.

Speculation on the price of gold is a market in its own right. As with other commodities, traders often try to predict the price of gold by using technical or fundamental analysis.

Technical analysis is the study of historic prices, often using a charting package. Speculators examine the price over a period of a few minutes, days or even months. Technical analysis involves chart patterns, moving averages and the understanding of market trends.

Fundamental analysis of the price can involve the study of global supply and demand in a given time period. If, for example, demand looks set to rise more sharply than its supply, prices can rise. The price can also be affected by the state of the global economy, the emergence of a recession or a period of significant economic growth.

Spread Betting and Contracts for Difference trading involve high levels of risk to your trading capital. These are geared products, meaning that you can lose more than the capital which you initially committed. Always speculate with capital you can afford to lose. Before trading make sure you understand the risk involved when trading with these investment products, they may not be suitable for all investors so seek impartial investment advice where appropriate.