Optencis
Gold is the most traded commodity on trading platforms, and one of the most watched assets in the world. It pays no interest and produces nothing, yet investors, central banks and traders buy it for one reason: it holds value when other assets lose it. This guide explains how its price is quoted, what moves it and when.
How gold is quoted
On trading platforms, gold usually appears as XAU/USD: the price of one troy ounce (31.1 grams) in US dollars. When XAU/USD rises, gold is gaining against the dollar.
The size of a lot depends on the broker: very often, 1 lot = 100 ounces, so a $1 move in the price is worth $100 per lot, and $10 per 0.10 lot. Check the contract specifications of your broker before you trade, then use our position size calculator with the right value per point.
What moves the price of gold
1. Real interest rates
This is the main driver. Gold pays no interest: when US interest rates, after inflation, are high, holding gold costs you the interest you could earn elsewhere, and its price tends to suffer. When real rates fall, gold becomes more attractive. That is why the Federal Reserve matters so much for gold.
2. The US dollar
Gold is priced in dollars. A weaker dollar makes it cheaper for buyers using other currencies, which tends to support its price; a stronger dollar tends to weigh on it. The link is not perfect, but it often shows on days of big US releases.
3. Fear and crises
In times of war, financial crisis or market stress, investors look for a safe haven, and gold is the oldest one. These moves can be sudden and large, and they can override the effect of rates and the dollar for a while.
4. Central banks and long-term demand
Central banks hold gold in their reserves, and some have been large buyers in recent years. Jewellery and investment demand, especially from China and India, also plays a part over the longer term.
The events to watch
- Fed decisions, eight times a year: the main event for real interest rates.
- US inflation (CPI): a higher figure than expected can push up rate expectations and weigh on gold, even though gold is seen as protection against inflation.
- The US jobs report: a strong report often supports the dollar and weighs on gold.
- Geopolitical news: unpredictable by nature, which is one more reason to keep your position size reasonable.
The dates and forecasts are in our economic calendar.
The best hours to trade gold
Gold trades almost 24 hours a day on weekdays, but the activity is concentrated in two periods: the London session and above all the London–New York overlap, roughly 13:00 to 17:00 London time, when the US data come out. The Asian session is usually calmer. See which markets are open right now with our market hours tool.
Gold moves more than a currency pair
In percentage terms, gold often moves more in a day than EUR/USD, and it can jump by several dollars within seconds after a release. Two consequences:
- Place your stop further away than on a currency pair, and reduce the position size accordingly, so the amount at risk stays 1 to 2% of your account.
- Watch the spread around releases and at night: it often widens more than on the major pairs.
Gold and EUR/USD often move in the same direction, because both react to the dollar: trading both at once on the same idea doubles your risk. See our EUR/USD guide.
Gold in binary options
On binary options platforms, gold follows the real market during the week. At weekends, only the OTC version stays open, and its price comes from the platform itself: the news and hours above do not apply to it.
See what changes with OTC assets.
Frequently asked questions
Why does gold go up when interest rates fall?
Because gold pays no interest. When rates fall, especially after inflation, the interest you give up by holding gold shrinks, and gold becomes more attractive compared with bonds and savings.
What does XAU/USD mean?
XAU is the code for gold, USD for the US dollar: XAU/USD is the price of one troy ounce of gold in dollars.
What is the best time to trade gold?
The London–New York overlap, roughly 13:00 to 17:00 London time, when volume is highest and US data are released.
How much is a $1 move worth on gold?
It depends on the contract: with 1 lot = 100 ounces, a $1 move is worth $100 per lot and $1 per 0.01 lot. Check your broker’s specifications.
Forex and CFDs are high-risk products traded with leverage, and most retail accounts lose money. Only trade money you can afford to lose.
