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Historically, gold has been closely linked to the concept of money and wealth. It used to be what money is made of; it was also used to measure a countryâs financial prowess until the abandonment of the gold standard. Today, gold remains an enticing and popular asset, especially considering it serves as a safe haven investment.This article will let you know how to trade Gold in South Africa – Guide in 2021
How to Make Money Trading Gold
Gold is a trading instrument that reacts to stress on the financial markets. Similar to the Japanese yen or Swiss franc, investors turn to gold when risk aversion is high and often use it to hedge their portfolio.
Thus, in times of trouble gold increases in price. When the markets are calm and investors readily buy riskier assets, gold declines in value.
Another important factor is goldâs relationship with the US dollar. Because its price is expressed in USD, if the dollar appreciates at price while all other market conditions remain the same, then gold will weaken in order to retain the same value. Alternatively, if the US dollar weakens and the market does not change otherwise, gold prices will rise.
The best advice for gold trading is to regularly read up the latest gold analysis and news. This can help you predict how the gold price in South Africa will move, and place your orders accordingly.
Currently, gold prices are increasing due to the coronavirus pandemic, which will likely define the markets for the entirety of 2021. Covid-19 has damaged economies around the globe, ensuring that safety assets are in high demand.
You may trade Gold with the services of Forex brokers in your region.
Advanced Trading Tips for Gold
As mentioned above, the key things to keep in mind when trading gold are whether risk aversion among investors is high or low, as well as whether the US dollar is weakening or strengthening. But there are more ways to predict the movement of gold. Consider these factors:
Supply & Demand
High supply and low demand mean lower prices, and vice versa. It would help to follow the biggest gold suppliers in the world, as well as the consumer demand for gold (for instance, jewellery or industrial needs). India and China are countries where people are more likely to buy gold jewellery as a form of investment.
The Technical Analysis of Gold
You can predict the trend of gold prices using two of the most important technical indicators – the MACD and the RSI.
The MACD can provide a crossover buy or sell signal, which indicates where the trend is heading. A buy signal means the price is likely to increase, while a sell means the opposite. The MACD is most reliable for gold when used on the weekly chart.
The RSI works similarly. If it is going up, expect the prices to grow; if it is declining, prices will drop. Important factors here are any possible strong support and resistance levels, which you can identify based on past minimums and maximums on the RSI chart.
How to Trade Gold
There are many ways to buy gold in South Africa, or sell it. Depending on your trading history and preferences, you could buy and sell gold directly as a commodity, or trade gold futures and CFDs.
A popular way to trade gold is to place orders on the XAU/USD pair, which expresses the value of gold in US dollars. Trading the XAU/USD is better suited for short-term orders, while CFDs and futures may be more long-term plays.