Gold – the safe-haven precious metal – is highly popular and is one of the most sought-after financial instruments for trading. Unlike other investments, gold has consistently showcased its resilience throughout history, remaining sturdy even during times of economic uncertainty.
World gold markets are fairly volatile, as gold prices are sensitive to several factors over the short term. This entices traders to speculate on gold prices.
Under a free market system, gold is considered a currency. Gold has a price, which will fluctuate relative to other forms of exchange, such as the US dollar. It is highly liquid and can be converted to cash in almost any currency with ease.
Gold is expected to perform well when confidence in paper currencies is waning, during wars, and when stocks suffer significant losses. Gold is frequently seen as a 'safe haven' during times of market or geopolitical turmoil.
As the purchasing power of the dollar or the dollar's exchange value decreases due to high inflation, it takes more dollars to buy gold, which increases the value of gold.
Gold is often correlated with the stock market during risk-on periods, while it decouples and becomes inversely correlated during periods of stress.
Gold has stood the test of time as a store of value, making it an ideal asset for long-term wealth preservation.
Trading gold can be good for beginners who want to diversify their portfolio and hedge against inflation, but it also requires a lot of research, strategy, and risk management. Gold is a volatile and liquid commodity that is influenced by many factors, such as supply and demand, geopolitics, market sentiment, and currency movements. Beginners can open a demo account with MEX Europe to gain trading confidence and then fund the account to trade gold with real money.
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