Gold has always been a popular investment commodity, and there are a variety of related products in the market, among which, London gold has the characteristics of long and short operation, small and large, and low holding cost, so it is favored by the market. What is London gold and how to trade it? This article will teach you to quickly understand how to buy and sell London gold, even if you are a novice, you can get started quickly.

Market turmoil has boosted demand for gold

According to the World Gold Council's Global Gold Demand Trends Report, total gold demand, including over-the-counter (OTC and inventory flows), reached a record high of 4,899t last year (2023). In particular, global central banks continued to buy gold aggressively, with net purchases of 1,037t for the year, the second highest on record.

The surge in demand was accompanied by a strong rally in the gold price, which soared to an all-time high of over US$2,100 an ounce last year.

The five major features of London Gold are favored by investors

In addition to physical gold, there are gold passbooks, gold ETFs, gold futures and London gold, among which, London gold has five advantages, which has attracted many investors to start trading London gold.

First, the investment flexibility is high: London gold is a spot contract with gold as the trading object, and the trading unit is called "hand", which can be operated long and short, and can be bought up or down, that is, whether gold rises or falls, there are opportunities to make money. Moreover, it can be used as a hedge, and multiple trading operations (opening and closing) can be carried out on the same day, providing more investment opportunities.

The second is to be small and broad: London metal is traded on margin, and gold can be invested with a small amount of money. At present, traders generally allow trading as small as 10 ounces of gold (0.1 contracts), about 310 grams of gold, and the threshold for investing in London gold is relatively low compared to other products, which allows many novices to experience gold market trading with a small amount of money. The standard contract size of London Gold is 100 ounces, 1 ounce is equivalent to about 31 grams of gold, and the initial margin for 1 contract is only $700, which is quite low.

Third, hedging and arbitrage: investors who hold physical gold can use London gold trading as a hedging strategy to diversify portfolio risk. In addition, there is no limit on the rise and fall of London gold, and the arbitrage space is also very large.

Fourth, the trading method is simple: there is no need to worry about stock selection, it is easier than stock speculation, and the analysis and judgment are relatively simple, which is closely related to the trend of the US dollar and crude oil. To invest in London Gold, you only need to choose to go long (buy first and then sell) or short (sell first and buy later); For example, if you are optimistic about the future of gold, you can buy 1 lot of London gold contract first, and then sell 1 lot to close the position after the price rises; If you are bullish on the gold market, you can sell 1 lot first, and then buy 1 lot to close the position after the price falls.

Fifth, the global market is active: it is linked with the international market, the transaction is active, and it is not easy to be manipulated by humans; Moreover, it is close to 24 hours a day, covering the trading hours of the main international gold market, which is very suitable for office workers to manage their financial investment.

You can trade London Gold in three simple steps

Step 1. Open a futures account
Find a gold dealer you like to open a trading account. Nowadays, almost every broker provides online account opening services, as long as you have the relevant personal documents, you can easily complete the account opening operation on your home mobile phone or computer.

Step 2. Make a deposit
After opening a trading account, deposit margin to trade. The margin can be directly deposited in the local currency, and then the local currency can be exchanged for US dollars through the domestic and foreign margin swap function provided by the broker, so that international gold can be traded.

Step 3. Place an order to trade
Finally, you can easily place an order through the mobile app or computer software. In addition, if you cannot keep an eye on the market at all times, it is recommended to set a stop-loss or stop-profit price in advance to control the risk.