Gold & Silver

What is Metals CFDs Trading?


Investors can trade metal CFDs to participate into commodities market. Gold traders can use CFD to speculate the gold price movement or use it as an inflation hedge. Either direction can be traded. It’s characteristics are quite similar to other CFDs products.

Features of metal CFDs

  • Trading metal CFDs offers investors leverage and flexibility. No physical bullions are exchanged. Investors are only trading the price difference.
  • Investors can have Long or Short Positions. If you think the bullion price will go up, you can open long position. If you think the price will go down, you can open a short position.

01-27The gold price is constantly changing throughout the trading day. The main factors that will affect the gold price include central bank monetary policies, supply and demand, and unexpected political events or wars.

The gold price is traded against US dollar. The strength and weakness of US dollar will also have big impact on gold price.

Gold CFD Trading Example


On MT4 platform, the Gold CFD is showing as XAU/USD. You can locate it from the Market Watch panel. It’s traded on margin. Below example illustrades how does the Gold CFD work:

Platform price: XAU/USD is showing 1,280.20/1,280.70 on 19 June 2014, with 50:1 leverage.

Trade direction: Long (anticipate the gold price will go up)

Trade size:1 lot = 100 ounces,$1,280.70/ounce

Total trade value: 100 x $1,280.70 = $128,070

Margin requirement:$128,070 x 0.02 = $2561.40

If gold price went up on the same day to:$1,310.20/1,310.70

Position close at:$1,310.20, with total 100 ounces value at $131,020

Trading profit:$131,020-$128,070=$2,950

If gold price dropped down to: $1,270.20/1,270.70

Position close at:$1,270.20, with total 100 ounces value at $127,020

Trading loss:$128,070-$127,020=$1,050

Trading on metal CFD is the same as trading other CFD products. It has same level of risks invlovled. It may not be stuitable for every investor. Please read the Product Disclosure Statement and fully understand the risks warning before you decided to trade CFDs.