Gold Spread Bet
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Investors often like to put their money in gold when there is uncertainty in the financial markets. However that is not the only reason the price is so high. Demand from India and China for the metal itself has also pushed the price up.
Currently the Gold (August) spread betting market is trading at $886.1 - $886.9 per ounce with Financial Spreads.
As with many financial markets, you can Spread Bet on the future value of commodities. In this case you can spread bet on the Gold (August) market to close higher than $886.9 by 28-Jul-08.
When you spread bet on Gold, you trade in £x per point, where a point is $0.1 of Gold movement. For example if you staked £5 per point and Gold moves $1.2 then that would be a £60 difference to your profit / loss.
£5 per point x $1.2 = £5 per point x 12 points = £60.
So let's say you see the live price on FinancialSpreads.com and they are currently quoting $886.1 - $886.9. And let’s also say you have done your homework and think that the Gold (August) market will close above the $886.9 mark:
- You have done your analysis and think that the Gold price will close above $886.9
- You decide you want to go long (buy) of the market. You risk £2 per point
- The market increases. You decide to let your bet run to the expiry date, 28-Jul-08
- So let’s say the August Gold market closes up at $895.8
- You bought the spread at $886.9
- Profits = (closing price - opening price) x stake
= ($895.8 - $886.9) x £2 per point stake
= $8.9 x £2 per point stake
= 89 points x £2 per point stake
- Profit = £178
Trading does not always go to plan and the Gold markets can be volatile at times. Had the Gold market gone down and settled lower at $878.5, then you would have lost on this spread bet:
- You bought the spread at $886.9
- Profits = (closing price - opening price) x stake
= ($878.5 - $886.9) x £2 per point stake
= -$8.4 x £2 per point stake
= -84 points x £2 per point stake
- Loss = -£168
Gold Trading Charts
From Financial Spreads.
Gold Trading Notes:
- You can spread bet on Gold for as little as £1 per point or €1 per point with GFT, World Spreads, Spreadex, FinancialSpreads.com
- Because Gold is priced in US$ then the price of gold will often go up when the US Dollar depreciates and vice versa, the price of gold will go down when the US$ strengthens
- Prices correct as of 16-Jun-08
Where to spread bet on Gold:
You can currently spread bet on Gold and other commodities at:
FinancialSpreads.com
Capital Spreads
"Gold Spread Bet" written by RThomas, last updated 14-Jul-2008
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