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
The NASD Over-the-Counter (OTC) Securities Exchange ended the first trading day of the week on a positive note, with a 0.39 per cent appreciation on Monday, May 25.
The positive vibe raised the market capitalisation of the trading platform by N10.11 billion to N2.571 trillion from last Friday’s N2.561 trillion, and lifted the NASD Unlisted Security Index (NSI) by 16.89 points to 4,298.17 points from the previous 4,281.28 points.
Business Post reports that the bourse recorded three appreciating securities and one depreciating stock at the close of transactions, with the sole price decliner being 11 Plc, which lost N23.43 to sell at N221.10 per share compared with the preceding session’s N244.53 per share.
Central Securities and Clearing System (CSCS) Plc gained N3.78 yesterday to trade at N74.85 per unit versus the previous price of N71.07 per unit, NASD Plc improved its price by N2.86 to N37.36 per share from N34.50 per share, and FrieslandCampina Wamco Nigeria Plc grew by 33 Kobo to N180.00 per unit from N179.67 per unit.
The volume of trades jumped by 153.1 per cent during the session to 59.2 million units from the preceding session’s 590,339 units, but the value of transactions fell by 37.9 per cent to N59.3 million from the N95.3 million achieved last Friday, and the number of deals contracted by 10 per cent to 27 deals from 30 deals.
Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units traded for N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 61.2 million units exchanged for N4.1 billion.
GNI Plc also closed the trading day as the most traded equity by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units valued at N6.5 billion, and Resourcery Plc with 1.1 billion units exchanged for N415.7 million.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited ended in the green territory on Monday after it chalked up 0.57 per cent on the back of renewed buying interest in financial equities.
The local stock exchange witnessed the insurance and the banking counters closing higher by 0.54 per cent and 0.08 per cent, respectively, amid profit-taking in the others. The energy index shed 1.77 per cent and the consumer goods sector depreciated by 0.26 per cent, while the industrial goods industry was flat.
At the close of business, the All-Share Index (ASI) went up by 1,412.65 points to 251,125.02 points from 249,712.37 points, and the market capitalisation soared by N906 billion to N160.983 trillion from N160.077 trillion.
Investor sentiment was bullish yesterday after Customs Street ended with 35 price gainers and 30 price losers, indicating a positive market breadth index.
Airtel Africa surged 10.00 per cent to N3,655.70, International Energy Insurance advanced by 9.68 per cent to N3.74, Sovereign Trust Insurance went up by 9.65 per cent to N2.50, Caverton rose by 9.63 per cent to N7.40, and VFD Group gained 9.55 per cent to close at N10.90.
Conversely, McNichols lost 10.00 per cent to finish at N7.20, The Initiates dropped 9.91 per cent to trade at N30.45, Learn Africa slipped by 9.69 per cent to N11.65, Zichis crashed by 7.93 per cent to N30.98, and May and Baker declined by 6.60 per cent to N46.70.
During the trading day, market participants transacted 629.4 million shares worth N40.9 billion in 82,434 deals compared with the 711.9 million shares valued at 29.1 billion traded in 62,386 deals last Friday, implying a decline in the trading volume by 11.59 per cent, and a rise in the trading value and number of deals by 40.55 per cent and 32.14 per cent, respectively.
Access Holdings was the busiest equity for the session with a turnover of 61.3 million units valued at N1.5 billion. Zenith Bank traded 37.9 million units worth N5.0 billion, Fidelity Bank sold 35.8 million units for N851.2 million, Japaul exchanged 24.7 million units valued at N90.9 million, and Tantalizers transacted 22.8 million units worth N103.2 million.
By Adedapo Adesanya
The Naira appreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) by 54 Kobo or 0.04 per cent on Monday, May 25, to trade at N1,374.92/$1 compared to last Friday’s value of N1,375.46/$1.
However, it further depreciated against the Pound Sterling in the official market during the session by N6.01 to sell for N1,855.73/£1 versus the preceding session’s N1,849.72/£1 and lost N158.02 against the Euro to close at N1,755.06/€1, in contrast to the N1,590.04/€1 it was traded last Friday.
In the same vein, the Nigerian Naira weakened against the United States Dollar at the GTBank FX counter yesterday by N2 to quote at N1,383/$1 versus N1,381/$1, and gained N5 in the parallel market to settle at N1,385/$1 compared with the previous rate of N1,390/$1.
The performance of the domestic currency comes as the external reserves inched higher to $48.72 billion, indicating a complex mix of sustained FX demand pressures and modest reserve accretion.
The movement in the FX market underscores the continued tension between demand-side pressure and policy-driven attempts to stabilise the naira.
While recent monetary tightening measures by the Central Bank of Nigeria (CBN) have helped to moderate extreme volatility, market participants are struggling to navigate a landscape shaped by intermittent dollar inflows, import-related demand and shifting investor sentiment.
As for the cryptocurrency market, most tokens were up amid optimism of a near-term US-Iran peace deal, as Iranian negotiators arrived in Doha, Qatar, for talks.
The Strait of Hormuz has been largely blockaded since the US and Israel struck Iran on February 28, though traffic has partially resumed in recent days. The agenda would include the reopening as well as uranium control.
TRON (TRX) rose by 1.8 per cent to $0.3714, Cardano (ADA) added 1.2 per cent to trade at $0.2444, Bitcoin (BTC) improved by 0.9 per cent to $77,283.62, Binance Coin (BNB) jumped 0.8 per cent to $661.30, and Ripple (XRP) increased by 0.8 per cent to $1.35.
Further, Ethereum (ETH) grew by 0.7 per cent to $2,018.82, Solana (SOL) expanded by 0.6 per cent to $85.37, and Dogecoin (DOGE) appreciated by 0.6 per cent to $0.1001, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
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