5 reasons to consider investing in gold CFDs in 2025
Gold CFDs can offer a variety of benefits to investors seeking liquidity, diversification and more.
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Valued by mankind for thousands of years as a precious commodity, gold is typically viewed as something of an "evergreen" asset by investors.
But how can it fit into a CFD portfolio?
Today, we take a look at some of the key factors that anyone curious about investing in gold CFDs should consider.
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1. Lower trading costs
Because trading CFDs doesn't involve purchasing the underlying asset, they have often been viewed as a less expensive way to gain exposure to a specific asset or industry without invoking the usual costs.
This can make it attractive for investors, particularly when you consider that gold (and other precious metals) traditionally have lower costs, even in comparison to other CFD assets.
There are still risks involved, but this can mean that gold can be a more cost-effective way to diversify your portfolio (more on that in a moment).
Similarly, investing with Pepperstone allows you to use leverage when trading.
Australian retail clients can trade gold CFDs with up to 20:1 leverage with Pepperstone.
Professional clients can trade with up to 500:1 leverage.
This can be a way to enhance the potential gains from trading gold CFDs.
However, leveraging also increase the risk. You can lose more than you initially invested.
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2. Hedging against economic uncertainty
In investing, as in life, you can't always rely on past performance as an indicator of future success.
That's why using tools like Pepperstone's market analysis is so important.
However, gold has traditionally been a strong performer, even in tough markets.
There are a variety of reasons.
Perhaps first and foremost, gold has been valued for thousands of years for its practical applications.
Jewellery is arguably the most common, though today it is used in electronics manufacturing, aerospace engineering and for a range of other purposes.
Another key reason is ideological.
In uncertain times, many investors will turn to gold as it is perceived as more "reliable" than other avenues of investment.
This can drive increased demand in the market.
Accordingly, gold tends to be seen as something of a hedge against wider economic fluctuations, particularly within wider portfolios.
3. High liquidity
CFDs are generally seen as high-liquidity assets, due to the rapid turnaround time on contracts.
This can allow for investors to enter or exit a position relatively rapidly.
Risk is obviously still a factor.
However, gold CFDs can be a way to add liquidity to a portfolio that's otherwise low-risk or is currently underperforming due to a market downturn.
And that brings us to diversification...
4. Portfolio diversification
Diversification is a key investment principle.
This is because it's quite rare for all of your assets to be performing equally well at once.
Markets operate on cycles. What performs well during one season may perform poorly the next.
However, seasoned investors don't simply offload their assets and purchase new ones in response to market cycles.
Rather, it becomes a matter of being able to ride the market's currents for longer-term periods.
CFDs are often looked to by investors as they can present the opportunity for high gains within a short timeframe, albeit with attendant risk.
This can help offset other assets during slower periods.
5. Opportunities across rising and falling markets
One of the advantages that CFDs offer -- in contrast to more traditional investments -- is that they can be used to generate profit irrespective of the wider state of the market.
This is because you're speculating on the future price of an asset, which may go up or down.
However, the risk is that you may lose more than you initially invested.
Using tools like Pepperstone's demo account can help you form more effective strategies before testing them out with real funds.