With the binary options market, trading gold is currently one lucrative means of generating an income. It is regarded as an asset that does not depreciate over time but rather appreciates in value which is why now is the perfect time to trade this commodity. The suitable binary options contracts for trading this precious metal are High/Low and Touch/No Touch Options.
Factors Influencing the Price of Gold
Traders need to understand the correlation of different factors with the market price of gold. The followingfactors greatly impact the price direction of the gold market:
Central bank involvement
Investors Sentiments (speculation and stockpiling)
Gold Mining Production and Gold Outputs
Demand for Gold
Central bank involvement. These institutions play a big role when there is a shortage of gold in their own countries. By slowly releasing the gold in times of shortages, and the supply balances the demand, changes in gold prices are observed.
Investors Sentiments. When speculations regarding the gold market are released, investor sentiments could either be buying gold in droves or simply being bearish and waiting it out during economic stability.
Demand for Gold. With emerging economies from different parts of the world, the elite have placed a higher demand for the precious metal. This has placed tremendous pressure to increase the production of gold, and increasing gold prices as well.
Which binary options strategy to choose?
In binary options, there are three things to consider when trading gold: the direction of the asset price, the expiry time and the strike price. Gold may be volatile; however, given the right strategy traders are well on their way to make a substantial amount in profits.
The ideal binary options contract for trading gold are High/Low and Touch/No Touch Options. Using technical analysis, traders who notice an uptrend on gold prices can easily choose the High/Low trade option. A continuous up movement could signal a bullish flag, where a Call position can be placed.
The In/Out or Range options are not too favorable for volatile assets such as gold. Gold prices are not expected to hold within the range for too long as this asset tends to be pushed towards fluctuating directions. When there is no discernible trend that the gold market is moving up or down, or is trading sideways, the Touch/No Touch option can be considered. If there is a bullish sentiment on gold, go for the Touch option. For a bearish target, a No Touch options is encouraged.