Thread: What currencies cover gold positions?

The irony is that many people are looking to cover the gold without understanding what moves it. If you don’t know why it goes up or down, any coverage you make will be pure chance. First master the asset. Then think about covering it. Not the other way around.

Yes, I agree. I’m studying the macro factors behind gold, such as real interest rates, inflation and global sentiment. But in the meantime, I wanted to explore practical tools. I find it a bad idea to keep an open and sitting position while the price goes against me 200 pips.

In that case, use options if your broker allows it. A gold put can protect you while you let the operation run. It is the cleanest coverage there is. Yes, prepare to pay the premium. Nothing is free in this business.

You can also cover yourself with futures or reverse CFDs if your platform allows it. But look at cross-leverage, you can end up making the drawdown worse if you don’t calculate it well. Sometimes less is more. Reducing lot and waiting is more effective than getting into complex structures.

I am surprised that no one has mentioned oil. There are times when gold and oil go in opposite directions, especially when the dollar is the common factor. It is not a constant correlation, but if gold falls by force from the dollar, and oil remains firm by scarcity, there you have a possibility of indirect hedge.

I've never thought about it from that angle. I've always seen oil as another world. But now that you say it, I feel like looking at those historical correlations. Do you have any reliable sources to see those correlation data with graphics and everything?

Myfxbook has a pretty useful correlation panel. You can also use Investing or TradingView with custom scripts to track your own. Yes, update the data followed. A correlation from three months ago today is useless. The market is changing like the weather.

Actually, this whole hedge thing sounds like an excuse not to take a stop loss. If you don't want to lose, don't operate. But if you do, bank the loss as an adult. The hedge is overrated. Use it if you have a diversified portfolio, not for a simple XAUUSD operation.

I don’t do it to avoid the stop, I do it because sometimes the movement is technical but with background noise. It’s gone from panic right before the bounce. If I have partial coverage, I can hold the main operation with colder head. It works like this for me.

Well, if it helps you psychologically, it's already a good reason. Trading isn't just technical, it's 90% mental. And if a coverage prevents you from sabotaging your plan, then it's worth it. Just make sure you understand what you're doing.