Cheap price does not always guarantee a good broker for gold trading. So, what other factors should be considered?

Choose the Best Broker for Gold Trading

Gold is the world's oldest currency and it is still highly tradable to this day. The precious metal is always considered reliable among traders and often seen as safe haven for traders. Even during uncertain times, the gold market always offers an excellent opportunity to profit due to its unique position in the world's political and economic systems.

There are various ways to earn profit in gold trading. Having a well-prepared trading strategy and choosing the right broker can determine your success from online gold trading.

See also: Gold Price Today

 

Essential Factors to Consider

In order to the best online broker for gold trading, there are several considerations that you need to think about so you don't choose the wrong one. You can compare the advantages and disadvantages of each broker ranging from the pricing, commission, to how the customer service works. Read further to find out more.

 

1. Regulation

When choosing any broker, the most crucial part to consider is the safety of the broker. It's vital to ensure that the broker is regulated by at least one reliable authority, which varies from one country to another.

Some of the leading regulatory authorities are the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) in the US, Financial Conduct Authority (FCA) in the UK, Australian Securities and Investments (ASIC) in Australia, and Cyprus Securities and Exchange Commission (CySEC) in Cyprus.

The regulation mostly deals with how retail participation in gold trading should be carried out and the list of requirements that the broker must comply with. The regulatory bodies will keep an eye on the financial condition and compliance of the broker to ensure the broker's reliability and the safety of the customer's funds.

 

2. Trading Platform

The best broker for gold trading always has several ions of trading platforms suitable for all traders with various expertise levels. It's a great idea to choose a broker that offers multiple trading platforms because it can give you more flexibility and give you the option to the one that suits your needs best.

Most of these brokers offer demo accounts, which can help if you are a beginner trader. Demo accounts also allow you to gain early experience before you start investing with real money.

There are several trading platforms that you can use to trade gold. Many market makers offer the popular MetaTrader 4 platform and list gold as a pair against the USD (XAU/USD) on the platform. You can also find gold listed on brokers that offer ActTrader, JForex, and cTrader platforms along with various mobile apps.

Not only that, but you can also trade with the Currenex platform, which has introduced gold trading in 2015 as a pairing of both gold/USD and gold/EUR.

 

3. Analytics on Gold

The best gold trading brokers must provide excellent technical support and tools needed for your trades. You can trade gold with Expert Advisors in trading platforms, which can be managed by using various programming languages.

When trading gold, you certainly need various kinds of market insight or analysis to find out price movements, right? Therefore, you should look for a broker who has a special market analysis feature for gold so that you can broaden your horizons

 

4. Spreads and Commission

Online gold trading brokers generate their income from spreads. It's essential to compare the price offered by several brokers to help you decide which one has the best offers. Some websites let you compare spreads offered by different gold trading brokers.

Some brokers may offer a cheap price to attract new clients but end up taking the money instead. That's why it's best to view this aspect realistically. Don't get tempted by the lure of massive discounts offered.

It's worth noting that although most forex platforms are commission-free, gold is known to have the largest spread compared to other assets on the platform. Therefore, some platforms can offer gold with spreads of up to 80 pips.

Combined with margin requirements, the price in gold trading brokers is definitely more expensive than regular currency pairs, so gold traders must be financially prepared for it.

 

5. Trading Accounts

Checking the trading account choices is also essential when picking the best broker for gold trading. Each account type was usually designed to meet certain standards for different categories of traders. That is why it would be helpful to see which account type you need and check if the broker provides it.

Generally, there are three trading accounts offered:

  • Micro accounts: The beginner-level account suitable for rookies. Contract sizes are usually small, restricted to not more than 10 troy ounces. The account is for traders with less than a $1,000 account balance. The minimum transaction size is about 0.01 lots or just 10 units of the asset.
  • Gold account: This is the medium-level account type and is usually a match for traders who can afford around $1,000 to $9,999.
  • VIP account: This account type is suitable for more experienced traders with a lot of cash to spare. The contract sizes are relatively big and the account capital requirements can reach up to $25,000 or more. With this account, traders can also get various additional perks such as social events, tickets to in-demand venues, and others.

 

6. Customer Support

The best brokers should have good customer support to show their good intention in helping and providing service for customers. In an unexpected situation, any trader would want fast and responsive customer support to solve their issues as quickly as possible.

Thus, it would be wise to pick a broker that provides active customer support at least during regular business hours. It's even better if the broker has 24/7 customer service available.

 

7. Leverage

Lastly, take a look at the broker's leverage. The rules regarding leverage for trading gold are different from leverage for forex trading. For example, the average broker leverage for forex trading is around 1:30 to 1:500, while the standard leverage for trading gold is around 1:20 to 1:50 only.

 

Top Gold Trading Brokers

Based on the criteria above, here are some examples of brokers for gold trading:

  • Pepperstone
    Pepperstone is a leading ECN broker that operates under the FCA. This broker provides floating spread for gold starting from 0.9 pips. For account availability, Pepperstone offers Standard and Razor Account with 1:20 leverage for gold trading. There are several trading platforms traders can choose from: MT4, MT5, cTrader, and TradingView.

  • AvaTrade
    AvaTrade is a top broker that was established in 2006 and is regulated across six continents where it operates, including by the CBI, ASIC, FSCA, BVI FSC, FSA, and ADGM. This broker offers spreads around $0.29 over the market with a leverage of 1:20 for gold trading. When it comes to trading platforms, traders can choose between MT4 and MT5.

  • FXTM
    FXTM or "ForexTime: was founded in 2011 and fully regulated in the UK, Cyprus, Mauritius, and South Africa. What is best about FXTM is, they offered gold market analysis that always updates. They also provide super-low commission rates and spreads that go as low as zero for XAU/USD. Same as AvaTrade, gold traders who open accounts in this broker can enjoy these facilities in MT4 or MT5 platform.

  • eToro
    eToro is regulated in several countries, including Cyprus, the UK, Australia, and the US. This broker also has gold analytical updates on their website. With leverage of 1:10, traders can trade XAU/USD in the eToro trading platform.

  • XTB
    XTB is regulated by several top-tier regulators such as the IFSC, FCA, KNF, and CySEC. For gold traders, XTB provides a 1:5 leverage for XAU/USD in Standard or Pro Account. For Standard Account, the spread is floating from 0.9 pips.

 

Conclusion

Although gold trading is considered more traditional than newer assets like cryptocurrency, its popularity is consistently high from time to time. Gold trading offers a great opportunity because of its vast market and more stable prices.

When choosing a gold trading broker, there are several important factors to consider as explained in this article, including regulation, software, fee and commission, trading platform, and trading account.

In this case, you must be able to filter the choices and pick the one that suits you the most. Make sure to stay realistic with your choice and weigh all the pros and cons before proceeding to register with the broker.

 

One of the factors you should consider when choosing a broker for gold trading is the spread. To minimize expenses, especially for those of you with limited capital, look for a broker that provides gold trading with low spreads.