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Trade Online on Spot Gold and Spot Silver

With VFS, you can trade on the price movement of metals similar to forex. All you need to know is the symbol for the product you want to trade and the contract size.


Who trades spot gold and silver, and why?

There are many different reasons that drive investors to trade spot gold and silver:

  • Trading is based on the use of fundamental and technical analysis.
  • Creating a balanced, diversified asset allocation model for an overall investment portfolio.
  • Applying risk management as a hedge against market volatility and financial crises caused by economic, political or social turmoil.

How to read a spot gold or silver quote?

Reading a spot gold or silver quote is very similar to reading a Forex quote. It is even represented the same way. For example, spot gold traded against the US dollar is XAU/USD.

In this example, it’s simple if you remember three things: XAU/USD 1165.73

  • The first symbol listed is 1 troy ounce of gold
  • The value of gold is always 1
  • The price literally translates to; 1 ounce of gold is equal to 1165.73 U.S. dollars

When the price or quote for gold goes up, gold has strengthened in value and is now worth more dollars than before. If the price of gold goes down, it takes fewer dollars to purchase 1 ounce of gold, and the value of the dollar has increased when compared to the value of gold.


Example:

Let’s say you decided to buy 1 lot of XAU/USD (spot gold) at 1165.73.

SCENARIO A

A few minutes later, the bid (or sell) price has risen to 1166.43, and you decide to exit your trade. You bought 1 lot at 1165.73 and sold at 1166.43, making 70 pips in the process. 70 pips, at $0.10 per pip, equal $7.00.

SCENARIO B

A few minutes later, the bid (or sell) price has risen to 1165.48, and you decide to exit your trade. You bought 1 lot at 1165.73 and sold at 1165.48, making 25 pips in the process. 25 pips, at $0.10 per pip, equal $2.50.

Scenario Opening Price Closing Price Difference Trade Size(Per PIP) P&L
A 1165.73 1166.43 +70 $0.10 +$7.00
B 1165.73 1165.48 -25 $0.10 -$2.50

Now, let’s say that we once again buy 1 lot of XAG/USD at 16.44.

SCENARIO A

A few minutes later, the bid (or sell) price has weakened to 15.79 and you decide to minimize your losses and sell the 1 lot of XAG/USD. The difference between buying 1 lot at 16.44 and selling 1 lot at 15.79 is 65 pips. 65 pips, at $.10 per pip, equal $6.50(P).

SCENARIO B

A few minutes later, the bid (or sell) price has weakened to 16.69 and you decide to minimize your losses and sell the 1 lot of XAG/USD. The difference between buying 1 lot at 16.44 and selling 1 lot at 16.69 is 25 pips. 25 pips, at $.10 per pip, equal $2.50(L).

Scenario Opening Price Closing Price Difference Trade Size(Per PIP) P&L
A 16.44 15.79 -65 $0.10 +$6.50
B 16.44 16.69 +25 $0.10 -$2.50