Positive gold swap and carry trade strategy applied to gold
You probably already know that for carrying over exchange positions to the next day, a corresponding commission called a swap is charged.
However, unlike other types of commissions, this indicator can be either negative or positive.
When it comes to currency pairs, the swap sign depends on the type of asset, the direction of the transaction, and the interest rate of the bank issuing the currency.
When trading gold on the exchange, a swap is also charged, but here everything is simpler: for purchase transactions, a negative swap is charged, while for sale transactions, a positive swap is sometimes charged.
The gold swap rate directly depends on the brokerage firm you trade with, and not every brokerage offers a positive rate. Positive gold swap rates for short positions can be found on the following brokers' trading platforms:
Alpari broker www.alpari.com
Broker Amarkets www.amarkets.org
As you can see from the screenshots above, the average positive swap size is 22 pips. This means that if you open a sell trade on XAUUSD, your profit will be increased by 22 pips when you roll your position over to the next day.
It is easy to calculate that when opening a sell transaction of 1 lot of gold (about 200,000 dollars), the profit for each day will be 22 US dollars or 0.00011% * 365 = 0.04% per annum
As you can see, the numbers aren't impressive. Even if you use 1:100 leverage in your trading, your annual profit will still be quite low, at 4% per annum.
However, short trades on gold carry increased risk, as the precious metal typically rises in price over the long term.
Therefore, using a carry trade strategy on an asset like XAUUSD is not particularly profitable, as you can earn much greater profits by simply holding funds in accounts without risking anything.
A positive swap on gold is nothing more than a nice bonus if you are entering into long-term short trades.
Read also:
Is scalping possible on gold? – https://time-forex.com/skalping/skalping-na-zolote
How to organize gold trading on the exchange - https://time-forex.com/interes/torg-zoloto-terminal
