4E Commodity Introduction: Introduction to Gold Investment

When it comes to gold, it has always been regarded as hard currency and chosen by investors as the most important hedging tool. The Chinese public has a particular fondness for gold, and slogans like "buy gold in troubled times" and "gold can preserve value" are well-known to us. As a highly sought-after commodity, gold has attracted countless investors.

Currently, the 4E Commodity Zone has launched gold derivative products. This article will introduce you to the commodity attributes, monetary attributes, and financial attributes of gold, as well as the underlying reasons affecting gold price fluctuations, helping you understand the basics of gold investment.

Commodity Attributes of Gold

Precious Nature: Gold is a naturally rare precious metal, highly valued due to its scarcity. Mining and refining gold require enormous costs and resources, which keeps its supply relatively low and helps maintain its value. Gorgeous gold jewelry has always been a symbol of nobility and wealth, so gold is widely used in jewelry processing and is a primary raw material for jewelry.

Use Value: Gold has excellent corrosion resistance, outstanding electrical conductivity, and thermal conductivity, thus playing an important role in the industrial sector. Among these, the demand for gold in the electronics industry accounts for about 65% of industrial applications. Additionally, gold is widely used in aerospace, telecommunications, chemicals, and medical fields.

Monetary Attributes of Gold

Historical Currency: Marx said, "Gold and silver are naturally money." Due to gold's characteristics of being easy to smelt, divide, and not corrode, it qualifies as a natural currency. Gold was one of the earliest forms of currency in the world, and countries used gold as a standard for international trade. Even today, some central banks still hold large reserves of gold.

Modern Monetary Attributes of Gold

Inflation Hedge: Gold is often seen as a tool to combat inflation. During inflationary periods, the purchasing power of paper currency declines, while the value of gold typically remains relatively stable, leading investors to view it as a means of preserving value.

Financial Attributes of Gold

Safe-Haven Asset: Gold is widely regarded as a safe-haven asset. During times of economic instability or heightened geopolitical tensions, investors tend to shift their funds into safe assets like gold to reduce risk.

Diversified Investment: Gold can be used to diversify investment portfolios. By allocating a portion of funds to gold, investors can spread risk, as gold's performance typically does not move in sync with traditional assets like stocks and bonds. In recent years, gold derivatives have emerged as a type of investment tool, highlighting this financial attribute and becoming important tools for risk hedging and speculation in the financial market.

Reasons Affecting Gold Price Fluctuations

Supply and Demand: The price of gold is influenced by supply and demand. Supply is affected by mining output, recycling rates, and central bank reserves, while demand is influenced by jewelry, industrial uses, and investment needs.

Dollar Exchange Rate: Since international trade is usually priced in dollars, there is an inverse relationship between gold prices and the dollar exchange rate. When the dollar strengthens, gold prices typically fall, and vice versa.

Geopolitical Events: Geopolitical tensions, conflicts, or crises often lead to an increase in gold prices, as investors view it as a safe-haven asset.

Economic Conditions: Economic data and global economic conditions significantly impact gold prices. When economic growth slows or becomes unstable, investors are more likely to seek gold as a relatively safe investment.

Inflation Expectations: Rising inflation expectations may drive up gold prices, as investors seek to preserve value and offset losses from currency depreciation.

Overall, gold is a versatile commodity, and its unique commodity, monetary, and financial attributes make it a powerful tool for portfolio diversification and risk management, especially in the current environment of high global inflation and heightened risk aversion. However, investing in gold still requires careful consideration, as its price fluctuations can be influenced by various factors, and it is essential to fully understand market conditions and risk factors before making decisions.

As a leading global financial asset trading platform, the 4E Commodity Zone has launched gold derivative products, supporting 200 times leverage for long and short trading. You can open a position and buy in just three simple steps. We welcome everyone to come and experience trading.