Like all commodities, the price of precious metals always comes down to a question of supply and demand.

Economic uncertainty caused by conflict, political unrest, recession, or natural disasters is the most common reason for increased demand. When the economy is strong and world politics are stable, demand decreases.

Supply can be affected by the discovery of new gold deposits or increased mining production. It can also be affected by new technologies that require precious metals like gold or silver to manufacture components. An increase in supply without a corresponding increase in demand can cause prices to fall, while a decrease in supply (or increased competition for existing supplies) can cause precious metal prices to rise.

Precious metals typically rise in value when other assets fall, allowing for profits during bear markets. They can also serve as a safe haven for investors looking to maintain portfolio value during uncertain times.

Gold and silver are generally less volatile than other commodities, making them attractive to beginner traders who want to employ fundamental or technical strategies without worrying about market fluctuations like oil and agricultural commodities.

Trading gold and silver CFDs allows you to trade precious metals even with limited capital. Some brokers even offer contracts for platinum and other metals.

Gold is the most popular metal and one of the most sought-after commodities. It’s the perfect choice if you’re looking for maximum liquidity.

You can also use a demo account to test your strategies across different markets. You can then decide which market best suits your chart patterns, indicators, or analysis.

Most investors rely on gold when seeking long-term stability. However, silver often follows the same trends as gold and, in some cases, can serve as a cheaper alternative.

CFDs are ideal for precious metals trading because they are easily accessible. You can open a position with limited capital and use leverage to increase the size of your trades.

CFDs allow you to track the spot market, rather than investing in futures or stocks, which are more complex to analyze and require larger amounts of capital and a brokerage account in a specific country.

This convenience and accessibility make CFDs attractive to new investors looking to trade gold online. However, even experienced traders can benefit from the advantages of these derivatives.

When trading CFDs, you should consider factors that influence supply and demand.

Root causes may include uncertainty caused by events, economic conditions, or reports.

Certain indicators, such as the Stochastic Oscillator, the Relative Strength Index (RSI), and Bollinger Bands, can also provide insight into supply and demand relationships.