HOW TO TRADE GOLD (XAUUSD)

XAUUSD is the price of one troy ounce of gold in US dollars. On a trading platform it behaves like a currency pair, which is why gold sits next to EURUSD in your market watch. It is popular because it moves — and that same volatility is what empties beginner accounts when position sizing is copied from a currency pair.

Contract size and pip value — the part people get wrong

With most brokers, one standard lot of XAUUSD is 100 ounces. Price is quoted to two decimals, and the commonly used definition is that a $0.01 move is one pip, so a $1.00 move in gold is 100 pips.

Gold routinely travels several dollars in an hour. A 0.10 lot position with a $5 stop risks $50 — which is 5% of a $1,000 account on a single trade. Always confirm the contract specification with your own broker before sizing, because it varies.

What actually moves gold

• US dollar strength — gold is priced in dollars, so a stronger dollar is usually a headwind.
• Real interest rates — gold pays no yield, so when real rates rise, holding it costs more in opportunity terms. Rate expectations often matter more than the current rate.
• US data releases — CPI inflation, non-farm payrolls, and Federal Reserve decisions produce the sharpest moves of the month.
• Risk sentiment — geopolitical stress and market fear draw money toward gold as a perceived safe haven.
• Central bank demand — a slower, structural driver rather than an intraday one.

When to trade it

The Asian session is typically quiet and range-bound. The London open brings the first real expansion, and the London–New York overlap is usually the most liquid, cleanest period of the day. Most beginners are better off trading one of those windows consistently than watching the chart all day. Around scheduled US news, spreads widen and stops can be filled at worse prices than expected — many traders simply stand aside for those minutes.

Practical rules for a volatile instrument

1. Size from the stop, never from habit. Gold needs a wider stop than EURUSD, which means a smaller lot — not the same lot with a wider stop.
2. Respect the higher timeframe. Set bias on the 4-hour or daily, execute on the 15-minute or 1-hour. Counter-trend scalping in gold is expensive tuition.
3. Account for the spread. Gold's spread is wider than the majors, so very tight scalps lose their edge to cost.
4. Cap your daily loss. Two losses and done is a rule that saves more accounts than any entry technique.

A simple structural approach

Mark the previous day's high, low and the overnight Asian range. Wait for the London open to break one side. Look for a retest that holds, with structure on the higher timeframe agreeing. Stop beyond the level that would prove the idea wrong, first target at the previous session's extreme. It is deliberately unexciting — and executable a hundred times, which is the whole point.

Gold trading carries substantial risk. Practise this on demo until you can size positions without a calculator panic, then risk small.