Trading Gold’s Ascending Triangle Chart Pattern
Gold has had a roller coaster ride so far this year. From the beginning of the year to mid-March, the price of gold rose by around 15%.
After falling a few points short of its August 2020 record high, gold prices fell around 14% through May and have since hovered sideways around yearly lows.
The up and down volatility caused by geopolitical events and central bank policies created a bullish ascending triangle pattern on the weekly gold price chart.
The Handel.MT4 and Handel.MT5 accounts allow you to speculate on the price movements of metals such as gold and other commodities using CFDs. This means you can trade long and short to potentially take advantage of rising and falling prices. Learn more about CFDs here How to Trade CFDs article.
The Invest.MT5 account allows you to buy real stocks and stocks from 15 of the world's largest stock exchanges. Gold investors may choose to buy gold mining stocks or gold ETFs (exchange traded funds) which could also benefit from higher gold prices.
Every trade involves high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance, or practice on a demo account first to build your knowledge before investing.
Why invest in gold?
Gold is one of the oldest currencies in the world and its price is closely watched by financial traders and investors around the world. There are a variety of reasons why investors would choose to invest in gold.
Gold's Safe Haven Status
Gold is often viewed as a safe haven in times of economic uncertainty. The world's most famous investor, Warren Buffett, said that "gold is a way of long betting on fear."
As global equity markets experienced significant declines earlier in the year, demand for gold has increased. Investors tend to view gold as a safe haven asset because of its store of value - it's liquid to buy and sell immediately, but has limited availability, making it more valuable.
Gold as a hedge against inflation
Research by the World Gold Council shows that gold can act as a hedge against inflation over the long term. With inflation nearing record highs last year, the US Federal Reserve is expected to hike interest rates five times this year.
However, according to investment bank UBS, “there is increased demand [in gold] for portfolio hedges” and fears that higher interest rates will stall growth. The bank's median gold price forecast for this year is $1,925.
Gold as a long-term investment
Many investors may choose to invest in Gold Exchange Traded Funds (ETFs). These are funds that track the underlying price of gold, either by holding physical gold in vaults or by buying gold futures contracts.
You can learn more about this in the Complete Guide in How to Trade Futures.
Investors may also choose to analyze the performance of gold mining stocks. When the price of gold rises, it can lead to better profit margins for gold miners. However, as with any stock, there are other factors to consider that can affect the bottom line.
At Admirals you can trade gold futures contracts, gold miners stocks and gold exchange traded funds or receive gold performance from an Admirals Wallet Gold account with no holding costs.
Gold for short-term speculation
Due to gold's volatility, there are traders who use short-term trading strategies to speculate on gold's price direction. This can be done using CFDs (Contracts for Difference) which allow you to trade long and short and potentially benefit from rising and falling prices.
Learn more about CFD trading strategies in this trading strategies guide for 2022.