Precious Metals Trading: A Beginner’s Guide

Open Account Open Demo Account

Trading is risky. Your Capital is at risk.

Diversify your portfolio by trading precious metals as CFDs. Go long or short and profit on the price movements. Precious metal trading can be an alternative or a compliment to trading other assets, such as currency pairs (or forex).

FXTM’s precious metals include silver and gold pairs against the USD. Get started today by creating an account and, if you use leverage when trading make sure you understand all the risks involved.

What is a Precious Metal?

The most well-known and traded high-value precious metals include silver, gold, platinum, and palladium. But there are more, such as beryllium, ruthenium, osmium, rhenium, iridium, and rhodium. FXTM only offers gold and silver trading, so this article will be focusing on those two precious metals specifically.

Precious metals have two things in common: scarcity and usefulness. It’s these things that make them so valuable. They can be used as a reserve for storing wealth, or for industrial applications. Most importantly, precious metals hold on to their value, unlike currencies that are prone to inflation.

For instance, gold has been a form of currency and used by jewelry makers for thousands of years. It stays unchanged, it can be recycled, and Central banks hold it in their reserves. About 10% is used in manufacturing, such as electronics, aeronautical circuitry, and medicine.

Types of Precious Metals

A metal’s chemical composition and physical characteristics are what distinguish them from each other. Most have high luster, hence their use in jewelry. They’re mined as ores and refined, but it’s difficult to achieve 100% purity.

trading account


Gold needs no introduction. It’s held special significance in people’s lives for thousands of years, emotionally, culturally, and economically. The Gold Standard was, in fact, a monetary system in the western countries before the Second World War. Countries pegged the value of their currencies on gold. After the Second World War, the Bretton Woods System began. It established a fixed value for one ounce of gold at $35. Other currencies had fixed exchange rates to the dollar. The Gold Standard system ended in 1971, and the value of the dollar was no longer dependent on gold.

Gold/US Dollar

trading account


Often taking second place to gold, silver has extensive uses besides jewelry and coinage. It has excellent thermal and electrical conduction properties, so there's a huge demand for it in the technology industry. Silver ions have antimicrobial properties and are often found in medicinal applications. Silver also makes mirrors in high-tech telescopes and solar panels. It’s rarer than gold, and its main source is as a byproduct of the production of other base-metals.

Silver/US Dollar

Why Is Gold Traded?

Gold trading happens for various reasons:

Why Is Silver Traded?

Like gold, silver trading serves different purposes. Traders may buy silver bullion as means of storing their wealth. They may trade silver indirectly by buying silver futures, options, or investing in ETFs mutual funds. Speculating on the spot prices of silver with CFDs is also extremely popular.

So, why invest in silver, and what should you know when trading silver? For a start, it’s the second most traded precious metal after gold.

Traders may pay attention to the gold-silver ratio, which is the value of silver to gold per ounce. You can calculate the ratio by dividing the present spot market price of gold with that of silver.

The ratio acts as a relative indicator for traders. From about 2013, this ratio has been widening. However, the ratio began narrowing in 2020, showing an increase in the price of silver. Unlike gold, silver is mostly used for industrial applications.

Traders should watch for trends that show economic recovery and increased industrial activity. Increased global demand for silver pushes prices higher. CFD traders may also appreciate that price movement for silver is more volatile than gold. While this may mean increased risk, it also creates more profitable opportunities.

What Affects the Price of Precious Metals?

Here are the main factors that have an impact on precious metal pricing:

Balance of Supply and Demand

Precious metals are inherently rare and finite. No gold will ever be created other than what already exists on earth. But, year by year, demand remains relatively stable. Shortages in precious metals may exist due to many factors and events. Average mine yields of precious metals per ton have generally been going down. Less supply and more demand always drive prices higher.


Key macroeconomic factors that may affect precious metals prices include monetary policies, financial market sentiments, and economic cycles. When the global economy performs well, precious metal prices rise.

Inflation & Hyperinflation

Inflation results in a weakening currency and a reduction in purchasing power. Investors use precious metals as protection against a weakening currency. More demand pushes precious metals prices higher.

Monetary Policy & Interest Rates

In the face of rising inflation, central banks will increase interest rates to curb spending. Gold, for instance, tends to experience demand when interest rates fall. Its demand falls when the rates increase.

US Dollar Effect

When trading gold, it’s essential to consider the effect of the US dollar. When its value increases, the gold commodity price tends to fall. Investors from other countries who want to purchase gold with the US dollar will find it more expensive. Therefore, there will be fewer buyers, and this may drive demand down along with prices.

Technological Advances

Most precious metals have industrial applications. Technological advances and innovations may affect demand. For instance, a new manufacturing innovation may result in the demand for a certain metal such as silver driving its price higher. On the other hand, if manufacturers substitute silver for cheaper metals such as aluminum, silver futures might be affected.

Government Policies

Governments adopt various policies regarding precious metals. In the past, the US has adopted policies to purchase all domestically produced silver. Also, central banks may decide to add more gold to their reserves.

Currency Devaluation

Devaluation refers to the measures taken by a bank to devalue its currency. Actions such as selling a country’s gold reserves may result in a devaluation of its currency. Leading up to the 2008-2009 crisis, the Reserve Bank of Australia had sold more than two thirds of its gold reserves. Get the most out of factors that influence the price movements of precious metals. Register with FXTM and start trading today.

Where to Trade Metals?

With FXTM, traders may start trading precious metals as CFDs. You’ll find various quotes for precious metals against other currencies. Two of the most popular ways are to trade Gold (XAU) or Silver (XAG) against the USD.

When trading with CFDs, you don’t own the underlying asset. It involves taking positions that predict whether the price of XAUUSD, for instance, will go up in value or down.

Opening a long position means buying the asset with the hopes that its price will increase. You profit based on the price difference when you close a position. Shorting the pair means buying it in the hopes that its price will go down.

We recommend conducting fundamental and technical analysis with charts to find trading opportunities. Make informed trades and eliminate guesswork.

When trading with an online precious metal brokerage, you can also access leverage. This means you can use a small deposit, for instance, $100 to open larger trades of up to $50,000 on a 1:500 leverage.

Choosing a Broker

The first and most crucial step is the selection of a broker for trading precious metals. Here are the features of a trustworthy and reliable intermediary.

Properly Regulated

Wide Range of Trading Instruments

The online broker should offer a wide range of trading instruments and asset classes, including precious metals. It will allow you to diversify your portfolio.

Flexible Trading Platform

A precious metals broker should offer a robust trading platform. It should allow you to perform automated trading with expert advisors. Most platforms work on mobile devices, so you can trade wherever you are.

Support for technical indicators, charting tools, and other third-party trading aids is crucial. One of the best trading platforms and the de facto industry standard is the MetaTrader Platform. We offer it at FXTM.

Copy Trading

With copy trading, beginners may copy the strategies of experienced and proven traders. On a platform that offers copy trading, you'll typically see the top traders or advisors along with their track record. You’ll need to find a trader with a strategy you like and begin copying their trades with your capital automatically.

Education & Trading Resources

Choose a precious metals broker committed to advancing the knowledge and skills of their customers. FXTM does this by offering educational resources, including tutorials, webinars, and seminars.

Market Analysis

The best brokers have in-house analysts. They provide creative insights for their gold and silver traders. It helps them spot profitable trading opportunities.


Here’s a short list of the most commonly asked questions about precious metals.

What are precious metals?

Precious metals are rare and prized naturally occurring minerals. They are physical commodities that investors can buy and store. Gold is the foremost traded precious metal. It has many applications and serves as a form of currency. Prices of precious metals are expressed per troy ounce (link it somewhere?) for trading purposes.

What do precious metals traders do?

They buy and sell precious metals either directly or indirectly. Trading takes place on metal(s?) marketplaces. The goal is always to buy low and sell high, and profit on the differences in price.

How to become a precious metals trader?

There are different ways of becoming a precious metal trader. If you don’t have (or prefer not to risk) a significant amount of capital, you may consider trading precious metals as CFDs. These are derivative financial products and don't represent any ownership.

What is the most profitable precious metal?

When trading precious metals, silver and gold have the greatest trading potential. Gold prices are more stable. Silver prices experience more volatility, which provides more advantages to speculative traders. However, traders should implement risk management techniques no matter the current market conditions.

What kind of trading is the best, stocks or commodities and metals?

Investing in stocks is an approach to purchasing and holding onto equities for a longer period of time. Traders with short term goals generally find commodity or metals trading more suited to their needs.

Start trading precious metals’
prices with FXTM today

You can trade precious metals on any account with FXTM, including the Advantage account – where the spread for Gold against the Dollar can be as low as zero!

Start by registering or logging in to MyFXTM, and continue by picking the account you’d like to trade on.

If you face any difficulty, you can contact our friendly Customer Support Team. Start trading precious metals with FXTM today!

Scroll Top
Risk warning: Trading is risky. Your capital is at risk. Exinity Limited is regulated by FSC (Mauritius).