A precious metal is a rare naturally occurring metallic chemical element of high economic value. Precious metals are often referred to as the ultimate safe haven assets during the times of market turmoil. Because of this a lot of experienced investors hold at least some part of their portfolio in precious metals.
Advantages of trading CFDs on Gold and Silver with Tickmill Europe Ltd (ex Vipro Markets Ltd)
- Access to low spreads and ultra-fast trade execution
- Minimum trade size from 0.01 lot
- Low commission fees
- All trading strategies allowed
XAU/USD is a spot Gold currency pair based on the physical price of Gold that can be bought or sold in US dollars. You can use up to 1:300 leverage to trade Gold.
The value of Gold is determined by the market 24 hours a day, 5 days a week. The price of Gold is predominantly determined by the market sentiment.
The price of Gold tends to increase with:
- Financial instability. If the overall sentiment on the financial market is weak then Gold becomes as one of most desired assets to store value. The more instable the financial markets are the more interest there is towards Gold.
- When prices in the economy are rising fast and currencies lose value investors tend to turn to Gold as source of stability.
- War and Political Crises. During major military conflicts people tend to turn to Gold because it is portable and it is demanded as a means of payment to purchase goods for survival – such as food and energy.
XAG/USD is a spot Silver currency pair based on the physical price of Silver that can be bought or sold in US dollars. You can use up to 1:125 leverage to trade Silver at Vipro Markets.
Price fluctuations of Silver are more volatile than Gold, because there is less liquidity but at the same time bigger influence from the industrial users of this precious metal. Silver as a material is used in a variety of industries like medicine, telecommunications, electronics, etc.
Examples of industries which affect the demand for Silver:
- Photography industry. Silver had a big part in photographic industry since it was used in Silver-based photographic film. Since year 2000 the usage of Silver dropped significantly due to the revolution brought by the digital camera industry.
- Energy source. Silver is the primary ingredient in the photovoltaic cells that catch the Sun’s rays and transform them into energy. The growth of the solar energy industry means that there is also bigger demand for Silver.
- Purification and hygiene. Silver has antibacterial effect and is therefore used heavily in medicine, water purification and food hygiene.
Correlation between Gold and Silver.
When Gold rises or falls, Silver tends to follow. The beta (β or beta coefficient) of Silver compared to Gold is generally higher than 1 which indicates that Silver is more volatile than Gold. As an example, it is very likely that on a day when the price of Gold gains 1%, Silver has a gain of 2%.
Remember that precious metals and correlated currencies tend to be very volatile.
Please bear this in mind and manage your risk accordingly.
The information provided here has been produced by a third party and does not reflect the opinion of Tickmill Europe Ltd (ex Vipro Markets Ltd). Tickmill Europe Ltd (ex Vipro Markets Ltd) has reproduced the information without alteration or verification and does not represent that this material is accurate, current, or complete and therefore should not be relied upon as such. The Information is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any particular trading strategy. We advise any readers of this content to seek their own advice. Reproduction or redistribution of this information is not permitted.