What XAUUSD means
XAUUSD is the price of one troy ounce of gold in US dollars. XAU is the international code for gold and USD is the dollar, so the symbol reads like a currency pair: when XAUUSD is 4,286.20, one ounce costs $4,286.20. Most forex brokers and prop firms offer it as a CFD, so you trade the price without owning physical metal. Some platforms call the same symbol GOLD or add a suffix such as XAUUSD.m.
The contract in numbers
These are the settings most brokers use. Check your own platform's symbol specification once, because a few brokers differ.
| Item | Typical value |
|---|---|
| 1 standard lot | 100 ounces |
| Smallest trade | 0.01 lot (1 ounce) |
| 1 pip | 0.10 price move |
| 1 point | 0.01 price move |
| $1 move on 1 lot | $100 |
| $1 move on 0.01 lot | $1 |
The last two rows are the ones that surprise new traders. A $10 move is ordinary for gold within a single session, and on one full lot that is $1,000. Traders who move from EURUSD, where one lot earns or loses $10 per pip, often size gold the same way and take far more risk than they meant to.
What drives the gold price
No single factor explains gold on every day, but a handful of forces do most of the work. Treat each one as a tendency, not a rule.
The US dollar
Gold is priced in dollars. When the dollar strengthens, gold becomes more expensive for buyers holding other currencies, and the price often softens. When the dollar weakens, gold tends to find support. On many days XAUUSD and the dollar index move in opposite directions.
Interest rates and real yields
Gold pays no interest. When bonds pay a high real return (the yield after inflation), holding gold means giving that return up, and demand tends to cool. When real yields fall, the cost of holding gold drops and it usually becomes more attractive. That is why US inflation data and Federal Reserve decisions move gold so sharply.
Federal Reserve expectations
Markets trade what they expect the Fed to do next. A speech or data release that makes rate cuts more likely often lifts gold; one that points to higher rates for longer tends to push it down. The move often happens on the change in expectations, before the Fed acts.
Safe-haven demand
During wars, political shocks or sharp sell-offs in stocks, investors often move money into gold. These moves can be fast and large, and they can override the usual links to the dollar and yields for a while.
Central bank buying
Central banks have been heavy buyers of gold in recent years. According to the World Gold Council they bought more than 1,000 tonnes a year in 2022, 2023 and 2024, far above the average of the previous decade. Steady official buying has been one of the pillars under the price.
Physical demand from India and China
India and China are the two largest markets for gold jewellery and bars. Demand rises around festivals and the Indian wedding season and falls when local prices jump. It matters more over months than minutes, but it shapes the bigger picture.
Costs you pay on gold trades
- Spread: the gap between buy and sell prices. It is usually tight in the London and New York sessions and widens around the daily rollover and big news.
- Commission: some accounts charge a fixed fee per lot instead of a wider spread.
- Swap: an overnight fee (or credit) for positions held past the rollover, often charged three times on Wednesday. Use the swap calculator before holding gold for several days.
Mistakes new gold traders make
- Trading gold with EURUSD lot sizes. Always size gold from your stop loss and risk. The XAUUSD lot size calculator does it in seconds.
- Stops that are too tight. A $1 stop on gold is often hit by normal noise. Use a stop based on the chart and shrink the lot size to match.
- Entering right before major US data. Spreads widen and price can jump in both directions within seconds. See how news moves gold.
- Ignoring margin on low leverage. On a funded account at 1:10, one lot of gold needs over $40,000 of margin. Check it with the margin calculator.
- Overtrading quiet hours. Gold often drifts in a narrow range late in the US session and in the Asian morning. Read the best time to trade gold.
A simple way to start
- Open a demo account and trade gold with the lot size you would really use.
- Pick one session to trade, ideally London or New York.
- Decide your risk per trade, such as 1% of the account, and size every trade with a calculator.
- Write down each trade: entry, stop, target, result and what you learned.
- Move to a live or funded account only after a few weeks of steady results.