In short
- XAU/USD is the price of one troy ounce of gold in US dollars.
- Gold is driven by real interest rates, the dollar, central bank buying and demand for safe havens.
- One standard lot is usually 100 ounces, so a $1 move is worth $100 per lot.
- Gold can fall for long stretches; with leverage, its daily swings can do serious damage.
How gold is quoted
Gold trades globally in US dollars per troy ounce, which is about 31.1 grams. In forex-style platforms it is shown as XAU/USD, where XAU is the international code for gold. A quote of 2,350.40 means one ounce costs $2,350.40.
What moves the gold price
- Real interest rates: gold pays no interest, so it tends to become more attractive when inflation-adjusted interest rates fall and less attractive when they rise.
- The US dollar: because gold is priced in dollars, a weaker dollar often coincides with a higher gold price, though the link is not fixed.
- Central banks: central banks hold gold as a reserve asset. According to the World Gold Council, their purchases exceeded 1,000 tonnes a year in 2022, 2023 and 2024, a significant source of demand.
- Safe-haven demand: in wars, financial crises and periods of uncertainty, investors often buy gold.
- Jewellery and industry: physical demand, especially from China and India, matters over the longer term.
Ways to get exposure to gold
| Method | What you hold | Main considerations |
|---|---|---|
| Physical bars and coins | The metal itself | Dealer premiums, storage and insurance; no counterparty risk if held yourself |
| Gold ETFs | Shares in a fund that holds gold | Annual fees; traded on stock exchanges during market hours |
| Futures | Exchange-traded contracts, e.g. 100 oz on COMEX | Leverage, expiry dates and large contract sizes |
| CFDs / spot XAU/USD | A contract on the price | Leverage, overnight financing and provider risk; see CFDs explained |
Contract sizes and what a move is worth
Most providers define one standard lot of XAU/USD as 100 ounces, though some differ, so always check the contract specification.
Example: 1 lot (100 oz), price rises from 2,350 to 2,365 = $15 × 100 = $1,500
Providers disagree about what a "pip" is on gold: some use $0.01, others $0.10. Think in dollars per ounce to avoid confusion. Our pip calculator and margin calculator both support XAU/USD.
Leverage and volatility
Gold regularly moves 1% to 2% in a day and more around major economic news. Retail leverage on gold is capped at 20:1 in the UK and EU. At that level, a 5% move against you wipes out the full margin on the position. Size gold trades with the position size calculator and read risk management.
Trading hours
Spot gold trades almost 24 hours a day from Sunday evening to Friday evening (GMT), with the heaviest activity during the London and New York sessions. The London afternoon price benchmark and US economic data releases are common times for sharp moves.
Is gold a safe investment?
Gold has held value over very long periods and has often done well in crises, but it can also fall for years. After peaking in 2011, it took roughly nine years to regain that level. As part of a diversified portfolio it can reduce overall volatility; as a leveraged short-term trade it is as risky as any other.
Frequently asked questions
What does XAU/USD mean?
It is the price of one troy ounce of gold in US dollars. XAU is the ISO code for gold.
How much is one lot of gold?
At most providers one standard lot is 100 troy ounces, so every $1 change in price is worth $100 per lot. Check your provider's contract specification, as some use different sizes.
Why does gold go up when interest rates fall?
Gold pays no interest. When interest rates, especially after inflation, fall, the cost of holding gold instead of interest-paying assets falls too, which tends to support demand.
Sources
- World Gold Council: Gold Demand Trends
- CME Group: Gold futures contract specifications