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What You Can Do to Increase Your Returns through Trading in Gold

  • Posted Date: December 13, 2022
Trading in Gold

Gold was used to be the main form of currency in earlier times. Imagine buying something and paying in gold coins. A tale of riches, for sure! However, now the scenario has changed. Our civilization is more evolved. Even if we don’t use gold as the currency now, it is still one of the most valuable metals. It plays a significant role in the world economy. The financial statements of various financial bodies and central banks also provide evidence.

This list also includes IMF, which manages and handles the ground-discovered gold up to 20% of the total production. Countries aim to balance their gold holdings, which is proof of the importance of gold to maintain the health of the international economy. This has also led to gold trading based on a solid gold strategy. As a result, it is one of the highest return-earning trading domains.

Several nations produce gold. Among all, China tops the chart of gold mining internationally. The current production of China is estimated at around 380 tonnes per year. Then, the list continues with the names like Russia, the US, Canada, etc. South Africa was also listed as the biggest gold producer in the 1970s. Now, several private companies have also entered the industry. Their main work is handling the gold mining and production process. One of the largest gold mining companies is called Newmont Corporation.

Then, there are other names like Franco-Nevada and Barrick Gold. These developing trends have influenced people to dive into gold trading. It is one of the best ways to defy inflation and preserve money. It is also a good gold tip for developing and investing wealth. Today, in this blog, we will see how gold can give higher returns to investors. Then, we will share a few gold trading tips followed by it.

What is gold trading?

Gold trading signifies the process of speculating the cost and price trends of the gold industry. As per the interpretations, the investors profit or lose depending upon their actions. Several ways make gold trading one of the best choices for investors. First, it provides a hedge against instability, making it a good risk manager.

In gold trading, futures, ETFs, shares, etc., are used. The conventional form of gold, like coins, is settled by converting it into equivalent cash. Gold trading is not just about buying at a low price and then selling it at a high price. Instead, it’s about moving as per the market trends to make the most out of it. This includes predicting the market trends to determine a position for yourself in the process. As an investor, if the market moves in the direction you have predicted, you will get more profit and vice versa.

Taxes on gold trading

There is a well-structured income tax act for gold trading and ownership. For example, suppose an investment of around Rs. 30 lakhs has been made; then you will need to pay a wealth tax of around 1% of the total investment made. On the other hand, the capital gains tax rate comes up to 20% in the case of physical gold or gold ETF.

How can one own gold?

For trading gold, you must own it first. In this field, the gold trading industry provides several options. From conventional to modern forms, you can own your gold in several forms like gold coins, jewelry, futures, Sovereign gold bonds, ETFs, and mutual funds.

How is gold trading highly profitable?

Every investor asks this question at least once in their investment journey. This concern comes from the fact that gold is an expensive investment option. Moreover, the gold strategy for trading also requires a lot of understanding and experience. So this can also cause adverse effects on a trader.

To answer this question, let’s digest that gold is one of the most traded commodities internationally. This also provides several investors with an excellent pricing option. Therefore, a strong gold strategy is a must to get profit on this platform. However, some traders also find this domain of trading very hard. To overcome this issue, the first solution is to understand that gold doesn’t exist physically when you buy it for trading. However, when we do mining, then the found matter is processed. Therefore, every tiny particle of gold in it goes for processing later. This is then converted into a sellable form of gold.

Analysis of past trends in gold trading for better benefits

The analysis of the gold trading market will help in understanding the moves taken or planned by others. To become a strong player in gold trading, you need to understand how the prices fall and increase. The main question is why? The answer is that gold prices come in a high-speed changing environment. So continuous analysis helps understand which moves to take and build a good gold strategy for trading. Identifying the trend is the key to success in this industry.

The gold industry is a fast-paced domain where things change every second. You can’t even determine all the influencing factors because they change frequently. For example, a diplomatic discussion happens between two countries the prices of gold change. However, the volatility also promises higher scope of return. A good investor can easily benefit from the changing dynamics of the gold trading industry. You can’t imagine how many people would have made profits as per gold mcx today. So if a person wants to exist and earn profit in such an industry, they need to ensure that they know all the trends and developments. This is one of the crucial aspects of gold trading tips.

Now the next point is how you can analyze the market. Is it as simple as just calculating the gold commodity’s lower and higher prices, or does it have much more to it? In reality, it is more technical than this. It is a data-driven process that takes an entirely scientific and logical direction to deliver results. Only the people making these decisions right can ace the gold trading industry.

The next crucial point is maintaining a negative correlation with the stock market. One of the most common conceptions is that stock market performance is inversely proportional to the gold market. The gold market becomes more muscular when the stock market is weakening. It is because several people consider gold as a suitable hedging medium to cut through the risk. So several people and investors start putting their money in gold in case of any issue in the stock market. Significant events like war, diplomatic friendship, inflation, etc., significantly affect gold trading.

Along with internal factors, external factors also play a significant role. Therefore, the gold market becomes safe when people are not trusting the stock market much. Mostly the investors who invest on a large scale divert their investment in the gold trading industry to protect their wealth against any economic crisis.

Gold works as an inflation hedge

Several investors have agreed that gold is crucial for protecting or hedging your wealth against inflation. It is subjected to the theory that gold will perform better if inflation increases. But the trends of a few years before completely disregard this theory. For instance, in 2022, the world economy wasn’t in its best shape because Russia invaded Ukraine. The complete global economy setback due to this incident. This caused a severe hike in the inflation rate of different nations. The inflation rate crossed the last four-decade high in some countries like the UK, EU, and US.

As per the theory, the gold prices would have gone to an ultimate high then. However, in reality, this wasn’t the picture. Instead, the gold went down by 17% from its peak in the same year.

Why should you invest in gold?

However, it doesn’t mean that gold is not a prudent investment. On the contrary, if you understand the gold market, you can safeguard your savings even in tough times with a good gold strategy. Here, we share the reasons that make your gold statement worth it.

  • Hedging against inflation for sure

If you are looking for a way of safeguarding your wealth against inflation, then gold is the best way. This is because gold prices never get affected by inflation. Instead, they increase by following the trends. Therefore, it is an evident method of protecting your wealth against time.

  • Immediate liquidity

It is one of the best backup plans for your wealth. When you invest your wealth in stocks or other forms of investment commodities, finding immediate liquidity options becomes tough. Suppose you need your money in a difficult situation, but it’s not getting liquidated on time. So, gold is a prudent choice because it is one of the most liquidated assets. In any emergency, you can sell your gold to any buyer of interest without any hassle of paperwork or a complicated process.

  • Tangibility

Gold is a tangible resource, so you don’t need to look for hard investment method of tangible assets such as real estate. It also comes with a very minimum risk profile, so it is perfect for investors still in their initial phase.

  • Wealth development

From the Indian perspective, gold is not just about financial investment. Instead, it creates a reputation for the family. It is considered a sign of wealth or a symbol of riches. People pass gold jewelry from one generation to another. This provides substantial wealth development opportunities.

Tips for getting higher returns in gold trading

Gold is one of the safest options to keep your money free from the effects of inflation. It is a tangible asset with immediate liquidity. Therefore, investing in gold trading with a strong gold strategy is prudent. But to master the art of gold trading, you will need a few tricks and tips. So we are here to give share a few good gold trading tips.

  • The cycles and turning points play a crucial role in understanding the nature of the market. Several markets follow cyclic nature, for example, the USD index and silver. These are good for short or long-term trades.
  • Several indicators can be used to measure the trends in gold trading; however, before choosing one, you need to ensure the efficiency of each indicator.
  • RSI and Stochastic indicators are considered the best indicators for gold trading. It is also an ideal choice for silver and other mining stocks.
  • You should also incorporate moving averages. However, ensure that the averages you choose have been proven effective even in the past. Suppose a market does not imply a particular moving average in use; you might also do the same.
  • The price seasonality is a very crucial aspect. So always study it closely. You can incorporate True Seasonals if they are accessible to you. Expiration derivatives also produce affect the market and gold price. So it is best to consider them as well. If you cannot grasp them, then the second best option will be regular seasonality.
  • Trend lines and channels are also beneficial in analyzing gold marketing. They come up as support and resistance lines/levels in commodity markets. The depth of lows and highs represents the intensity of support or resistance.
  • The old highs and lows can also be taken as support or resistance levels.


The gold trading market is one of the most influential markets in the world. It provides a guarantee of saving your money against inflation. It is the best option to safeguard your wealth against time damage. Moreover, you can get higher returns through the gold market if you work strategically. To build a strong gold strategy, you need to understand the market from a more profound point of view. This will help you in generating higher returns while keeping your savings safe. It is considered one of the best ways of heding your funds and building your wealth. To understand and master the art of gold trading, you should read about the trend lines and channels. Understanding the trending indicators is a crucial part of getting ahead in gold trading.

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