Gold has become so famous that it has the third biggest average daily trading volume in the globe, at 145.5 billion US dollars. For thousands of years, a billion people have been attracted by this bit of golden metal.

Source:https://www.statista.com/statistics/625422/daily-trading-volumes-of-major-financial-assets-worldwide/

Some investors and purchasers have historically ignored the gold price, denying its capacity to be an asset and assuming it will just accumulate dirt particles over time. However, gold, like many other commodities that suffer price fluctuations and, at times, a continuous increase, passed through — and continues to go through — this favourable situation.

Looking at the gold price performance countless investors have added gold to their portfolios throughout the years, believing that exposure to the metal will bring advantages such as higher returns or security during economic downturns. 

Source: Gold Price (https://goldprice.org/gold-price-chart.html )

While some investors may have been pleased with the final outcome, others may have lamented their investment. Given the different (and often diametrically opposed) perceptions of gold — as a safe haven, an extra diversification tool, or a real “currency” with intrinsic monetary worth but no “legal tender” status — you may be thinking about whether incorporating gold to your portfolio is a sensible decision.

If you are a newbie to commodities trading, you need to be cautious to avoid some of the most typical blunders. It is always preferable to learn from others' experiences, even if they are not your own. So, let's have a look at a few banana peels to avoid in the realm of commodity trading when you begin your journey into commodities investment.

Blunder #1: From the beginning, betting big.

Many inexperienced traders fall into the trap of betting big during their first investment. In commodities trading, this may be a dangerous venture. If you are new to the market, one of the most essential commodities trading advice is to start with a little amount of money. In this manner, you safeguard your cash from unneeded losses. You may enhance your trading record over time by improving your understanding of world events and market price shifts.

Blunder #2: Saving and investing for the short to medium term.

For short-term investments, gold is a particularly valued asset among investors. However, if you want to avoid making pitfalls while investing in gold, don't have excessive expectations. Expecting a 50% increase in the price of gold in six months or a year may leave you disillusioned.

The rate of return on gold investments changed substantially from 2006 to 2021 but provided positive returns in the majority of the years studied. The return on gold as an investment hit over 27.9% in 2020 highest since 2011, and the annual average gold price has steadily climbed since 2015. When investing in gold, it is advisable to take a long-term perspective. This might assist you in riding out the volatility in the near term.


Source: GOLD PRICE ( https://goldprice.org/gold-price-euros.html )

Furthermore, when it comes to short-term financial needs, avoid relying too much on gold. If you sell your investment on short notice, your returns may be substantially lower than anticipated.

Blunder #3: Aiming to Time the Market.

It is difficult to anticipate the market, and even seasoned investors frequently make these mistakes. According to Determinants of Portfolio Performance research on American Pension Fund Returns, the right asset allocation accounts for around 94% of portfolio returns, rather than timing the market or individual stock selection.

Blunder #4: Buying Gold at a Time When It Is Most Desirable.

Many people believe that there is never a bad moment to acquire gold coins for financial purposes. In general, as more people get their hands on it, the price will most certainly rise. It's all about supply and demand. While there is no such thing as a "poor" moment to buy gold, it is nevertheless important to remember why one is buying gold in the first instance.

Often, shrewd gold purchasers would only purchase at the least popular seasons of the year, largely to take advantage of reduced costs. This is also a true matter of endurance because one must wait for a while before becoming famous again. But doesn't this make it even more thrilling?

Blunder #5: Insufficiency of diversification.

Don't ever put all of your money into a single commodity. For instance, looking at the commodity price forecast summary % change (table below), you may find the agriculture and forestry sector particularly appealing, or the energy industry may offer tremendous promise for large returns in the near future. Regardless, it is best to diversify your investments to limit your losses if a particular commodity or industry collapses suddenly.

Table: Commodity Price Forecast Summary Percentage Change

Source: Forecasts by TD Economics as of May 2021 ** forecasts by TD Securities and TD Economics as of May 2021

To summarise, You must define your investment objectives, timeframe, and the role of gold in your entire strategy. If you are considering gold for diversification, you should understand that diversification may imply "extra income source" or "protective hedge," or both, relying on the macro-factors impacting the economy.

Commodity trading provides several chances for high rewards. When investing in commodities, however, it is critical to stay calm and patient. In contrast to stock market investment, commodities futures contracts provide investors with larger investment flexibility. As a result, it is critical to understand your specific risk-reward ratio and invest properly.

It is critical to understand that not all commodities are equally hazardous. To ensure you have the proper picture, consider the level of risk that is appropriate for your profile. This is essential because commodities experience enormous price movement based on even the most speculative rumor of key news.