Economy
How to Trade Gold in Nigeria
Gold has traditionally been seen as a way to store your money. It’s not affected directly by either fiscal policy or monetary policy of governments and central banks like currencies.
It will always be worth something – unlike a currency that can end up being almost worthless as a result of rapid inflation, for instance. That’s why whether it’s in the uptrend or in the downtrend, the gold market offers high liquidity and excellent profit-making opportunities due to its unique position within the world’s economic and political systems.
Some traders often fail to take full advantage of the changes in gold prices because they haven’t learned its unique characteristics or the hidden pitfalls that can steal their profits. Let’s take a look at the advantages of trading gold, factors that can influence its prices and how to trade gold profitably.
What Drives Gold Prices
Like we’ve mentioned before, gold prices can be driven by a limited number of catalysts. Market sentiment, volume and trend intensity are generally driven by:
- Inflation and deflation
- Greed and fear
- Supply and demand
Market participants can face increased risk when they trade gold in reaction to one of these factors, when in fact, it’s another one driving price action. Imagine there’s a major selloff in the financial market, and gold starts rallying.
Traders assume that fear is moving the precious metal and expect that the emotional crowd will carry the price higher.
However, inflation may have actually triggered the stock’s decline, attracting a more technical crowd to the market that will sell aggressively.
Combinations of these forces are always in play in world markets, establishing long-term themes that track equally long uptrends and downtrends.
Gold attracts numerous crowds with diverse and often opposing interests. The so-called gold bugs (individuals who buy gold as protection against an anticipated collapse in the value of currency, stocks, etc.) stand at the top of the crowd, allocating an outsized portion of family assets to gold equities. They are long-term market players who are rarely discouraged by recurring downtrends, so they eventually shake out less ideological traders.
Gold bugs add massive liquidity, providing a continuous supply of buying interest at lower prices. They also serve the contrary purpose of providing efficient entry for short-sellers, especially in emotional markets when one of the three above-mentioned factors swings the market in favour of strong buying pressure.
To trade gold profitably, you need to know the crowd sentiment. Cayman Sentiment Index is a unique indicator offered by the AMarkets online broker absolutely for free to all of its clients that will allow you to spot potential market extremes, which can be considered as a strong signal for a correction or a trend reversal.
Examine long-term charts
Make sure to examine the gold chart carefully. Start with a long-term history that goes back at least 100 years. In addition to spotting trends that lasted for decades, you’ll see that the yellow metal has also trended lower for long periods of time, robbing profits from gold bugs. From a strategic standpoint, such an analysis is useful because it helps you identify price levels that need to be watched if and when gold decides to test them again.
Summing up
To trade the gold market profitably, make sure to study how the three polarities we mentioned in this article impact gold buying and selling decisions. Don’t forget to devote some time and analyze the long and short-term gold charts to see which key price levels may come into play.
Keep in mind that traders widely use gold as a “safe haven” asset. When market participants are worried about risk trends, they tend to flock to gold.
On the other hand, as risk appetite grows, expect a selloff in haven assets. As you can see, gold is an important hedge tool against inflation and a valuable asset that can bring you good profits.
If you consider trading gold, make sure you choose a reputable global broker with favourable trading conditions. AMarkets offers some of the lowest spreads in the industry to trade gold.
Just recently, it slashed its spreads on gold by 30% on ECN accounts, allowing its clients to make the most out of their gold trading.
By Adedapo Adesanya
Seven price gainers flipped recent declines at the NASD Over-the-Counter (OTC) Securities Exchange, raising the alternative stock market by 2.19 per cent on Friday.
According to data, the market capitalisation added N51.24 billion to end N2.389 trillion compared with the previous day’s N2.338 trillion, while the NASD Unlisted Security Index (NSI) climbed 85.65 points to close at 3,994.32 points, in contrast to the 3,908.67 points it ended a day earlier.
Business Post reports that the advancers were led by MRS Oil Plc, which improved its value by N13.00 to N200.00 per share from N187.00 per share, FrieslandCampina Wamco Nigeria Plc gained N7.40 to settle at N91.55 per unit versus the previous day’s N84.15 per unit, Central Securities Clearing System (CSCS) Plc appreciated by N6.08 to N71.00 per share from N64.92 per share, Afriland Properties Plc added 66 Kobo to finish at N17.17 per unit versus N16.51 per unit, IPWA Plc rose 37 Kobo to N4.15 per share from N3.78 per share, First Trust Mortgage Bank Plc grew by 11 Kobo to N1.20 per unit from N1.09 per unit, and Food Concepts Plc went up by 10obo to N3.70 per share from N3.60 per share.
On the flip side, there were two price losers led by Geo-Fluids Plc, which depreciated by 28 Kobo to N3.32 per unit from N3.60 per unit, and Industrial and General Insurance (IGI) Plc dropped 5 Kobo to sell at 45 Kobo per share from 50 Kobo per share.
Yesterday, the volume of trades went down by 92.0 per cent to 3.7 million units from 45.8 million units, the value of transactions fell by 59.4 per cent to N84.5 million from N208.2 million, while the number of deals went up by 7.7 per cent to 42 deals from 39 deals.
CSCS Plc remained the most traded stock by value (year-to-date) with 32.6 million units exchanged for N1.9 billion, trailed by Geo-Fluids Plc with 119.6 million units valued at N470.3 million, and Resourcery Plc with 1.05 billion units traded at N408.6 million.
Resourcery Plc closed the day as the most traded stock by volume (year-to-date) with 1.05 billion units sold for N408.7 million, followed by Geo-Fluids Plc with 119.6 million units worth N470.3 million, and CSCS Plc with 32.6 million units worth N1.9 billion.
By Adedapo Adesanya
The Naira weakened further against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, February 20, by N4.97 or 0.37 per cent to N1,346.32/$1 from the N1,341.35/$1 it was transacted on Thursday.
Heightened FX demand tilted the market toward the downside yesterday, exerting upward pressure on rates despite efforts by the Central Bank of Nigeria (CBN) to stabilise the foreign exchange market.
Also in the official market, the domestic currency depreciated against the Pound Sterling during the session by N9.39 to sell for N1,815.25/£1 versus the previous day’s N1,805.86/£1, and lost N7.33 against the Euro to close at N1,584.62/€1 compared with the preceding session’s N1,577.29/€1.
The story was not different for the Nigerian Naira at the GTBank FX desk, where it depleted against the Dollar by N7 on Friday to quote at N1,356/$1 versus the N1,349/$1 it was sold a day earlier, but remained unchanged in the black market at N1,370/$1.
It was observed that risky sentiment among Foreign Portfolio Investors (FPIs) contributed to the FX market, amid fears of hot money flight due to capital gains tax and other factors.
As for the cryptocurrency market, it was mostly green yesterday in reaction to a Supreme Court verdict dismissing a fresh 10 per cent global levy by President Donald Trump.
The apex court on Friday described Mr Trump’s global tariff rollout as illegal. The decision did not clarify what should happen to tariff revenue already collected, and it doesn’t necessarily spell the end of the trade agenda, with multiple legal and executive avenues still available.
Litecoin (LTC) grew 2.7 per cent to $55.00, Cardano (ADA) appreciated 2.6 per cent to trade at $0.2815, Binance Coin (BNB) expanded by 2.6 per cent to $627.19, Dogecoin (DOGE) recouped 1.3 per cent to quote at $0.1, Ripple (XRP) jumped 0.7 per cent to $1.43, Solana (SOL) improved by 0.5 per cent to $84.15, and Ethereum (ETH) soared 0.1 per cent to $1,962.78.
However, Bitcoin (BTC) lost 0.2 per cent to sell for $67,850.49, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Dipo Olowookere
A further 0.99 per cent was gained by the Nigerian Exchange (NGX) Limited on Friday after a positive market breadth index supported by 53 price gainers, which outweighed 23 price losers, representing bullish investor sentiment.
During the trading day, the trio of Jaiz Bank, Fidson, and NPF Microfinance Bank chalked up 10.00 per cent each to sell for N11.00, N86.90, and N6.27, respectively, while Deap Capital appreciated by 9.96 per cent to N7.62, and Mutual Benefits increased by 9.94 per cent to N5.42.
Conversely, Secure Electronic Technology shed 10.00 per cent to trade at N1.62, Sovereign Trust Insurance slipped by 9.73 per cent to N2.32, Ellah Lakes declined by 7.91 per cent to N12.80, International Energy Insurance retreated by 5.56 per cent to N3.40, and ABC Transport moderated by 5.26 per cent to N9.00.
Data from Customs Street revealed that the insurance counter was up by 2.52 per cent, the industrial goods sector grew by 2.28 per cent, the banking space expanded by 1.43 per cent, the consumer goods index gained 1.23 per cent, and the energy industry rose by 0.05 per cent.
As a result, the All-Share Index (ASI) went up by 1,916.20 points to 194,989.77 points from 193,073.57 points, and the market capitalisation moved up by N1.230 trillion to N125.164 trillion from Thursday’s N123.934 trillion.
Yesterday, investors traded 820.5 million stocks valued at N28.3 billion in 63,507 deals compared with the 898.5 million stocks worth N38.5 billion executed in 61,953 deals, showing a jump in the number of deals by 2.51 per cent, and a shortfall in the trading volume and value by 8.68 per cent and 26.49 per cent apiece.
Closing the session as the most active equity was Mutual Benefits with 79.0 million units worth N427.1 million, Zenith Bank traded 44.0 million units valued at N3.8 billion, Chams exchanged 43.9 million units for N182.0 million, AIICO Insurance transacted 42.4 million units valued at N179.8 million, and Veritas Kapital sold 36.0 million units worth N90.6 million.
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