What is XAU/USD? A beginner's guide to trading gold

XAU/USD is the price of one troy ounce of gold in US dollars. XAU is the market code for gold, USD is the US dollar. If the quote is 4,000, one ounce costs 4,000 dollars.

In CFD and forex trading you do not own gold. You trade the price change. Buying (going long) profits if the price rises. Selling (going short) profits if it falls. On most platforms 1 standard lot is 100 ounces, so a 1 dollar move is 100 dollars per lot.

What moves gold? The US dollar (a stronger dollar usually weighs on gold), interest rates and bond yields (higher real yields tend to hurt gold), inflation data, central-bank buying, and fear in the markets. Big news such as US jobs, inflation and Fed decisions can move gold 20 to 50 dollars in minutes.

Why traders like gold: it trades almost around the clock on weekdays, has tight spreads, and trends strongly. The catch: it is volatile, and leverage makes losses fast. That is why you decide your stop and your risk before you click.

Next: how to size a gold trade and the free interactive Academy.

Education only. This is not financial advice. Trading gold with leverage involves a high risk of losing money.

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