Gold (XAUUSD) market basics for beginners
By Forexuro Desk. Education, not financial advice. All guides
Gold is one of the most watched markets in the world. Traded online as XAU/USD, it reacts to interest rates, the US dollar and global risk in ways that differ from currency pairs. This guide explains the basics in plain language.
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What XAU/USD means
XAU is the code for one troy ounce of gold, and USD is the US dollar. The XAU/USD price is the number of dollars needed to buy one ounce. When the price rises, gold is getting more expensive in dollar terms, or the dollar is getting weaker, or both.
Most retail traders access gold through spot CFDs or futures rather than physical metal. Contract sizes differ by broker. A common CFD convention is 100 ounces per standard lot, but you should always check your broker's contract specification before trading. The gold pip and point value calculator shows what a move is worth for your position size.
What moves the gold price
| Driver | Typical effect on gold |
|---|---|
| US interest rates and yields | Higher real yields usually weigh on gold, because gold pays no interest. Lower yields tend to support it. |
| US dollar | Gold is priced in dollars, so a stronger dollar often pushes it lower and a weaker dollar often lifts it. |
| Inflation | Gold is widely seen as a long term store of value, but in the short term the rate response to inflation often matters more. |
| Risk and geopolitics | Periods of stress can increase demand for gold as a safe haven. |
| Central bank buying | Large official purchases can support prices over longer periods. |
These are tendencies, not rules. Sometimes two drivers pull in opposite directions, for example rising inflation alongside rising yields. Our guide to rate decisions explains why expectations matter more than the decision itself.
Why gold feels different from currency pairs
Gold often moves much further in a day than the major currency pairs, measured in percentage and in money per lot. That makes position size especially important: the same lot size that feels calm on EUR/USD can feel very large on gold. Our guide to position sizing for gold walks through the arithmetic, and gold vs forex compares the two markets side by side.
Spreads on gold can also widen around major US data releases and during quiet hours, which affects where stops are triggered.
When gold is most active
Gold trades almost around the clock during the week, but activity is uneven. It usually picks up when London opens and is often busiest when London and New York overlap, especially around US data such as inflation and payrolls. Quiet hours can bring wider spreads and sudden moves on thin liquidity. See market sessions and the economic calendar for the timing.
Key events gold traders watch
- US inflation reports (CPI and PPI). See our inflation data guide.
- US jobs data, especially nonfarm payrolls.
- Federal Reserve decisions, statements and speeches.
- Major geopolitical developments.
A basic checklist before a gold trade
- Check the economic calendar for US releases in the next few hours.
- Note the current spread and compare it with normal conditions.
- Decide your stop loss from the chart, not from the amount you want to make.
- Size the position so the stop equals your chosen risk per trade. The lot size calculator supports gold.
- Know where you will exit in both outcomes before you enter.
Frequently asked questions
What does XAU/USD mean?
XAU is the code for one troy ounce of gold and USD is the US dollar. The price shows how many dollars one ounce costs.
Why does gold often fall when US yields rise?
Gold pays no interest. When yields on US bonds rise, holding gold becomes relatively less attractive, so prices often come under pressure, although other drivers can outweigh this.
How big is one lot of gold?
It depends on the broker. A common CFD convention is 100 ounces per standard lot, but always check your broker's contract specification.
Related: the US dollar index and gold explains why gold often moves opposite the dollar, and how interest rates affect currencies covers the rate expectations behind it.
Related reads
Next guide: How interest rates affect currencies
Rate differentials, expectations, the carry trade and overnight swaps.
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