Trading Precious Metals
Since the beginning of time, gold, silver, copper, platinum and palladium have been considered as highly valuable and sought after. Their high value comes as a result of their rarity. They are expensive, difficult to mine, and appreciated by industries and investors alike.
In today’s trading world, it is possible to invest in a commodity, such as gold without actually having to physically own the metal.
Factors Influencing Precious Metal Trading
Several distinct factors come into play when analysing the prices of precious metals:
- Supply – can be affected by decline in production and political instability.
- Demand – mainly comes from jewellery, use in everyday technological products, and for investment purposes.
- Market Volatility – Precious metals have often been used as a safe haven investment when markets are unpredictable.
- Currency Strength – Most precious metals are priced in USD, and thus it would be wise to monitor the dollar index in order to better forecast the price dynamics.
What are Precious Metals
Precious metals are defined by their rarity, and their use as an investment vehicle (refers to any way a person or business can invest with the intention to ultimately grow their money). The term precious metals refers to the group of metals that are known to be unique and highly valuable.
A mixture of economic and financial factors have historically affected the price of gold and other precious metals. When the markets are extremely volatile or bearish due to external drivers, precious metals have often been seen as a safe haven and an asset for retaining and storing wealth.
Precious metals also known as rare metals that have desired characteristics with unique beauty, are used commonly in jewellery pieces. These metals do not rust or decay, therefore, they can last for many years, often gaining in value.
Some incredible uses for precious metals, for example where silver is incorporated in manufacturing are; Solar energy panels, medical and surgical equipment, everyday electronics, cell phones, cameras, mirrors and many other items. Gold is often desired for jewellery, electronics, orthodontics items since it is pliable and conducts electricity and can merge well with other metals. Popular items such as awards and medals are also made of gold.
mainly comes from jewellery, use in everyday technological products, and for investment purposes.
Precious metals have often been used as a safe haven investment when markets are unpredictable.
Most precious metals are priced in USD, and thus it would be wise to monitor the dollar index in order to better forecast the price dynamics.