A Beginner’s Guide to Trading GOLD CFDs

Dear Traders,

Gold has been a very popular commodity. Human fascination with gold trading is as old as recorded history. We don’t know for sure when the first human picked up a gold nugget, but some research suggests that  flakes of gold found in Paleolithic caves date as far back as 40,000 B.C.

We can possibly track gold back to 200,000 B.C., when first gold mines were founded. According to the source, archeological research has shown that the less known “African Stonehenge” settlements represent one the most mysterious and misunderstood structures found to date. Obviously, the ancient civilisations nurtured a strong love for gold.

If we assume that the archeological diggings are accurate, it could point to a civilisation that lived at the southern tip of Africa, mining gold for more than 200,000 years, and then completely and suddenly vanished from the radar. We may be looking at the activities of the oldest civilisation on Earth, and it might explain the reason why gold has been sought heavily since the beginning of time.

The history tells us that the first evidence of the gold/silver ratio was found in the code of Menes, the founder of the first Egyptian dynasty. This code states that “one part of gold is equal to two and a half parts of silver in value.” This is our earliest of a value relationship between gold and silver.

Nowadays, not many people opt to buy gold coins and bullion. But in fact, you can invest in gold CFDs and potential to make profit on that investment. One of the ways to do so is to trade CFDs on MetaTrader 5, one of the best platforms for gold CFD trading. Let us explain in detail!

Gold CFDs in a Nutshell

In a nutshell, it’s a derivative. Derivatives are not similar to options. With options, you have an opportunity to buy or sell a stock at a predetermined price. The same applies to commodities trading, you can opt to take delivery of it or sell it at the end of the month (EOM). Derivatives are pretty much bets on what those options/commodities prices will be at the time of settlement. With Gold CFDs, you might speculate on the upside and downside of the price of Gold using both technical and fundamental approach.

Gold Inter Market Correlation

For comparative purposes, Iron ore is the largest export for Australia, representing a third of its exports in value, while Gold is less than 10 per cent of commodity exports.  You could argue that the price of coal is more important than the price of gold to Australia because it also exports more of it by value. The recent depreciation of the Australian and Brazilian currencies will help boost exports, whilst also protect their domestic industries from imports.  Also, easier monetary policy in Australia will also mitigate the negative impact of lower iron ore prices.

Despite this, the AUD has a high correlation to Gold, as a result of Australia’s large gold mining sector. Fluctuations in the Gold prices alter the demand for the AUD as purchases of the metal are made, ultimately causing changes in the AUD/USD currency pair as well. 

In addition, when analysing entries for the AUD and BRL currencies, I suggest you look at the price of Iron ore as a potential driver of returns.

As Australia is one of the major producers of gold and other commodities, one should consider the Australian dollar as a ‘commodity currency’”.  As Gold is largely considered a currency, at times when the US dollar weakens, Gold often increases in value as a safe-haven and store of value.

Trading Gold CFDs

Gold on paper may include investment funds in gold values or certificates and gold mining securities.  Paper gold offers numerous advantages over physical gold for investors including, but not limited to these:

  1. Gold on paper does not require any storage requirements or costs, which represents a real saving to ensure maximum security.
  2. Gold on paper can also be rapidly profitable as it enables you to leverage via brokers and rapidly find an exit without having to search for a physical buyer.
  3. Gold on paper can be traded online using specific trading platforms, such as MetaTrader 4 and MetaTrader 5, which also offer other advantages, e.g., short-selling when the price of gold is expected to fall.

Gold is surely one of the most popular ones, and traders prefer to use Gold scalping strategies.

Why Gold Trading Online

Gold might be going through a revaluation phase, in which cryptocurrencies are now rivaling it as the preferred risk-off asset or when such inflation risks persist. The crypto hype has potentially weakened some demand for Gold. Furthermore, there is a possibility that the US Fed will hike rates three times over the next 12 months, which will result in shifting investments from Gold to Bonds. This is actually a good thing for traders due to possible volatility and a lot of potential trading opportunities.

How to trade Gold CFD (click the link) on MT4?

The strategy uses the MetaTrader 4 or MetaTrader 5.

Gold Trading Strategy: How to Trade Gold

Time frame: 5 min


  • 5 EMA set on close (blue), 5 EMA set on open (red);
  • MACD 12,26,1;
  • EMA 100 set on close  (dodger blue);
  • Any Pivot Point indicator

Time to trade: The first three hours of London and/or New York sessions . Risk is 0.3-0.5 % per position.

Long entry:  

  • The price is above EMA 100;
  • The MACD closes higher than the previous time interval above the 0 line;
  • The 5 EMA of the close (blue) has crossed the 5 EMA of the open (red);
  • Stop-loss is below the most obvious swing low or Pivot Point support
  • The target is the next pivot point, or if there is a strong bullish momentum, any pivot point above the first target.

Entries are highlighted in light blue and are marked with arrows.

Short entry

  • The price is below EMA 100;
  • The MACD closes lower than the previous time interval below the 0 line;
  • The 5 EMA of the open (red) has crossed the 5 EMA of the close (blue);
  • Stop-loss is below the most obvious swing low, or Pivot Pivot Support;
  • The target is the next pivot point, or if there is a strong bearish momentum, any pivot point below the first target.

Entries are highlighted in light red and marked with arrows.


Gold is a volatile market, but if you know how to trade it and if you trade within the appropriate risk boundaries, it has the potential to become one of the best markets to trade. Setups are happening constantly and the market almost always sees some action.

Cheers and safe trading,


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