Precious metals such as gold trading involves investors having a clear picture of the precious metals market and taking advantage of its high volatility and constant price fluctuations.
Investors can also, however, use precious metals as a safe-haven asset to maintain and increase value when the economic outlook is less favorable. This has traditionally been the case for gold, which investors buy in when economic outlook turns into negative.
How to Trade Gold Contract?
The price of gold against the US dollar on September 27, 2016 was $ 1,334.60 / 1,334.80, and and proposed leverage is 100:1.
1 lot equals 100 ounces, the Gold value per ounce is $1,334.80
Trading Value: 100 x $1,334.80 = $133,480/lot; required Margin: $133,480 / 100 = $1334.80/lot
If the Gold price rises to: $1,400.00 / 1,400.20
Close Price: $1,400.00, a total of 100 ounces are worth of $140,000
Profits: $140,000- $133,480 = $6,520
If the Gold price falls to: $1,300.00 / 1,300.20
Close Price: $1,300.00, a total of 100 ounces are worth $130,000
Losses: $133,480- $130,000 = $3,480