Many new investors are undecided about whether they should trade currency pairs or delve into gold trading. Although both Forex and gold trading take place on exchanges, they have differences that investors, especially newbies, need to consider before investing in any of them. 

Most of the time, gold trading generates more profits than Forex, although Forex or contract of difference brokers are required to trade the two assets. Before the advent of Forex trading, many traders used gold in exchange for goods and services. Also, many investors tend to purchase and hold gold during inflation since it is a significant factor affecting the asset's value.

Understanding Gold Trading

For centuries, there have been many means of storing wealth, with gold being one of them. Investors engaging in gold trading may not reap the benefit in a short time. Thus, only investors looking for long-term benefits are more suited to it. Trading physical gold can come with many complications. Thus, gold investors rather buy gold stocks or exchange-traded funds. 

With gold ETFs, investors will not have the physical gold with them. Thus, they do not need to worry about its problems. However, the investors will obtain net profits from the precious metal. If you want to obtain the physical gold to save for the long term, you will need to worry about where to store them. Having gold in its physical form has its benefits, too, as investors will not worry about fluctuations or other factors affecting the gold price.

Merits of Gold Trading

• Suitable for investing for a long time
• Less volatility compared to Forex and stocks
• Lucid market trends for gold according to macro fundamentals
• Inability to manipulate the value of gold

Understanding Forex Trading

One of the biggest financial markets in the world is foreign exchange, which provides traders with the opportunity to make profits once they have a good strategy and can analyse the market very well. Many organisations and individuals like banks and investment bankers trade on the foreign exchange market. 

Before trading in the Forex market, the traders speculate on the movement of a pair of unique currencies. The volatility of Forex trading is high. However, the gains from Forex trading are high for risk-takers with good trading strategies. Thus, only traders not afraid of taking risks should delve into it.

Merits of Forex Trading

• Easy conversion to cash
• Inability to manipulate the market
• Ease of trading currencies derivatives
• In case of political events or uncertainties, currency derivatives are usable as a hedge.  

Where to Invest Between Gold and Forex

Selecting which assets to invest in between Forex and gold trading is impossible unless you understand each of them and choose the one that suits you. Below are some of the factors to consider:

• Unlike currency pairs, gold is not readily available, and its scarcity makes it impossible for the demand for gold to end, although the value may fluctuate. Negotiating gold exchange-traded funds is easier which is the same as when trading Forex.
• If you are trading Forex, you can enter the market at any time to buy or sell currency pairs, unlike gold trading, which has a specific time in which it is accessible to investors.
• Forex traders can benefit from the high leverage, which is acceptable in Forex trading. However, it comes with considerable risk as it can either increase the profit or loss of traders. However, gold trading does not have such high leverage due to its stability in the market.
• In the financial industry, gold is among the most reliable and stable assets and a good investment for low-risk takers willing to hold it for a long term. In Forex trading, the risks are more than in gold trading, but it is reduced by establishing a margin call to prevent traders from losing their entire money in case of losses.

Conclusion

Gold trading is a good investment opportunity for investors, the same as Forex trading, making it somehow difficult to select which of them to trade. Many investors trade gold while trading other commodities to protect them from losing all their investments since gold value does not fluctuate often. Forex trading involves enormous risks and it is traded for gains, not stability, unlike gold. 

Also, Forex trading does not require holding on to a pair for the long term as traders can make profits from the trade in the short term. The bottom line is that traders willing to take risks are better suited to Forex trading, whereas those that prefer stability are suitable for gold trading.