Spread Betting and the Gold Markets

Spread Betting and the Gold Markets

Gold has broken through to yet another record high. The previous high of $1226 per troy ounce was set in November 2009. Since then the gold market has dropped as low as $1044. We are now in the middle of 2010 and gold is trading $20 higher than its previous record level.

In an almost contrarian view to the Euro, it is the bears who are looking a touch green about the gills, especially as a strengthening Dollar has normally been associated with a weakening gold price.

The reason the ‘strong dollar = weak gold price’ equation is not currently working is probably due to the debt problems in Europe and Japan. As Simon Denham of Capital Spreads said, “While the markets look vulnerable, gold will maintain its safe haven role. I have to admit that the response of the Central banks and the IMF to the Southern European debt problems is almost guaranteed to ensure continued volatility in world markets.

“Looking at the longer term chart, the bull-run for gold still looks healthy but the higher it gets the more prone it will become to sharp corrections to the downside. Buying at these levels now requires quite deep pockets, certainly if you want to buy the physical variation”.

Having said that, you don’t have to buy gold to speculate on it. One particular type of financial trading, namely financial spread betting, has a range of attractive features and is worth investigating further.

The simple breadth of markets makes financial spread betting an interesting investment option. Spread betting companies tend to offer thousands of markets from UK and US Stocks to Sugar, Oil, Gold and Dollar / Yen rates.

Also, with gold spread betting, investors can go long or short of the market. If they feel the gold market will go up they will 'go long' or speculate on the price to go up. Likewise, if an investor feels the gold market will go down then they will 'go short' and speculate on the price to go down.

Of course, as with all investments such as trading shares, funds, pensions, housing etc, you can lose money. With spread betting you can lose more than your initial investment.

So why would an investor trade if there is a risk of losing money? Well we have already outlined a couple of useful options and it is interesting to note that with this type of trading your losses can be limited. Some firms let you use a Guaranteed Stop Loss which works as an automatic request to close your trade if your position moves against you by a set amount. In addition, the Guaranteed Stop Loss does not close a profitable trade.

Also the 24-hour trading that some companies like paddypowertrader and FinancialSpreads.com offer provides interesting opportunities. The underlying markets may be closed but you can still trade markets like Gold, Crude Oil, the FTSE and Euro/Dollar rate from Sunday night all the way through to Friday.

Before you consider investing though, note that spread betting carries a high level of risk to your capital. Please ensure that spread betting matches your investment objectives. Make sure you familiarise yourself with the risks. If necessary, seek independent advice.

Spread Betting Comparison - Commodities Markets


Gold Daily - Spread Size	4	5	5	4	5	4	4	7
Gold Daily - Min Stake	£1	$0.60	£1	£0.1	£1	£1	£1	£1
Gold Futures - Spread Size	6	8	6	6	7	6	6	14
Gold Futures - Min Stake	£1	$0.60	£1	£0.1	£1	£1	£1	£1
Brent Crude Oil Futures - Spread Size	4	6	6	6	5	4	4	12
Brent Crude Oil Futures - Min Stake	£1	$2	£1	£0.5	£1	£1	£1	£1
US Crude Oil Futures - Spread Size	4	6	6	6	5	4	4	12
US Crude Oil Futures - Min Stake	£1	$2	£1	£0.5	£1	£1	£1	£1

Comparison Notes.

Under no circumstances are the comments and the information provided herein to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice.

Neither CleanFinancial.com nor Financial Spreads or any contributing author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

Financial Spreads » "With FinancialSpreads.com you get all the advantages of
Spread Betting as well as commission free CFD Trading on 2,500+ markets, 24 hour trading, professional level charts and..." read Financial Spreads review.

Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary

Article provided / approved by Financial Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110

'Spread Betting and the Gold Markets' edited by DB, updated 19-May-10

Related Articles:

Ladbrokes Financial Spreads, updated 17-Jun-10
Ladbrokes Financial Spreads offers investors a range of benefits including Free Guaranteed Stops, Spreads from as low as 1 point and the ability to buy and sell major financial markets, including stock market indices, equities, FX markets, commodities and...read article: Ladbrokes Financial Spreads.

ODL, updated 12-Oct-10
According to ODL, ''ODL Markets is powered by FXCM and only makes a profit from the spread. Our No Dealing Desk technology...read article: ODL.

The Gold Market in December 2010, updated 06-Dec-10
The two month highs of the US dollar have weighed on the price of gold. Despite the fact that gold prices usually rally in times of economic uncertainty, such as the...read article: The Gold Market in December 2010.

FTSE 100 Spread Betting and European Sovereign Debt, updated 01-Dec-10
The world stock markets and the euro have slumped on concerns that the European sovereign debt crisis will spread across the continent. Further clouding the...read article: FTSE 100 Spread Betting and European Sovereign Debt.

Korea, Ireland and the Spread Betting Markets, updated 23-Nov-10
Given their safe haven status, the dollar and gold markets have rallied a bit from the pre-news levels but it is unlikely that much more will happen unless...read article: Korea, Ireland and the Spread Betting Markets.

US Quantitative Easing and the Forex Spread Betting Markets, updated 22-Nov-10
Whilst the US Dollar will often benefit from turmoil in the markets the US Federal Reserve's second round of quantitative easing will most likely...read article: US Quantitative Easing and the Forex Spread Betting Markets.

Where Next for the UK and US Spread Betting Markets?, updated 19-Nov-10
Investors had few places to hide recently as commodities, bonds and stocks fell on fears that China may raise interest rates. However it's been a double dose of...read article: Where Next for the UK and US Spread Betting Markets?.

Up or Down for Spread Betting Indices?, updated 12-Nov-10
At the beginning of November 2010, in an attempt to boost the anaemic US economy, the US Federal Reserve announced that it would buy $600bn of government bonds by...read article: Up or Down for Spread Betting Indices?.

What's Affecting the Forex Spread Betting Markets?, updated 11-Nov-10
Whilst the dollar remains weak against the high-yielding and emerging market currencies, it has been looking stronger versus the euro and the yen after...read article: What's Affecting the Forex Spread Betting Markets?.

BoE Inflation Report Aids Sterling Spreads, updated 10-Nov-10
The fact that UK growth prospects are looking reasonable means that the BoE may well have to look at higher rates at the back end of 2011. As a result we a seeing a rise in Sterling...read article: BoE Inflation Report Aids Sterling Spreads.

First Page << 1 2 3 >> Last Page

Daily Spread Trading Index

Index of spread trading articles - the daily Spread Trading update from Financial Spreads, for more articles see the Spread Trading News Index.

Q) Average Trading Results?

A) Get free trading tips, offers, price updates, important news and more! All Free - Click here!

Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The contents on CleanFinancial.com are for information purposes only and are not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.

Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.

1) Daily Trading Tips

2) Financial Tips

3) Financial Tipping