What is Precious Metal Trading?
Much like trading currency pairs, Precious Metals enables traders to take a Long or Short position in Gold or Silver while simultaneously taking the opposite position in the US Dollar or other major currencies. Precious metal Gold and Silver trades globally in an over-the-counter market, and prices float freely based on Supply and Demand. The spot price, is quoted for the Metal to be paid for (including delivery) two days following the date of the actual transaction (also known as the settlement date).
Precious Metal gold and silver trades a lot like currency pairs in the foreign exchange market. Trading is available 24 hours a day from Monday at 01:00 server time to Friday at 24:00 server time. There is no central market however; the main centers for trading Precious Metal gold and silver are London, New York, and Zurich. Liquidity is typically highest when European market hours overlap with trading in New York – roughly four hours a day during the morning for US Traders. There may be some illiquid periods for trading Precious Metal gold and silver around the close of the US market. There is a twice-daily fix for gold and a daily fix for silver in Lindon that helps set reference points for intraday price. Settlement is very similar to Forex settlements.
Who trades Precious Metal gold and silver, and why?
There are many different reasons that drive investors to trade the Precious Metals, Gold and Silver
- Speculation on the price base on the use of fundamental and or technical analysis
- Creating a balance, diversified asset allocation model for an over all investment portfolio
- Applying risk management as a hedge against market volatility and financial crises caused by economic, political or social turmoil