How to Trade Gold (XAUUSD): A Beginner's Guide
How gold trading works: what XAUUSD is, lots and pips on gold, what moves the price, the best hours, how to size a trade, and how to practice for free.
Trading gold usually means trading XAUUSD, the price of one ounce of gold in US dollars, through a broker or a prop firm. It is popular because it moves a lot and trades almost around the clock. Those same big moves make it easy to lose money quickly, so size matters even more here than in currency pairs.
Lots and pips on gold
One lot of gold is usually 100 ounces.
| Lots | Ounces | A $1.00 move |
|---|---|---|
| 1.00 | 100 | $100 |
| 0.10 | 10 | $10 |
| 0.01 | 1 | $1 |
Platforms disagree about what a pip is on gold. Many call $0.10 one pip, others call $0.01 a point. To avoid mistakes, think in dollars of price: a stop $5 away on 0.10 lots risks $50. The lot size calculator has gold in it, and forex lot sizes explains the basics.
What moves the price
- US interest rates and inflation. Gold pays no interest, so it tends to do better when real rates fall. CPI and Federal Reserve days can bring sharp moves. See FOMC day trading.
- The US dollar. Gold is priced in dollars, so a stronger dollar is often a headwind.
- Fear and geopolitics. Traders buy gold during stress, though not on every headline.
- Round numbers. Levels like 2,700 or 2,750 attract orders and often show reactions.
These are tendencies, not rules. On any one day the price can do the opposite.
When to trade it
| Session | New York time | Usually |
|---|---|---|
| Asia | 19:00 to 2:00 | Quieter, smaller ranges |
| London | 2:00 to 11:00 | Moves pick up |
| New York | 8:00 to 17:00 | Most of the volume, US data at 8:30 |
The London and New York overlap is the busiest stretch. Many traders pick that window and ignore the rest, the same idea as kill zones.
How to size a trade
Start from the loss you accept. With $10,000 and 1% risk, you can lose $100. If your stop is $5 away, that is $100 ÷ $5 ÷ 100 ounces = 0.20 lots. If gold is moving fast and your stop needs to be $10 away, the size becomes 0.10 lots. The risk stays the same, and only the size changes.
Common beginner mistakes
- Using a currency pair's stop. A stop that fits EUR/USD can be far too tight on gold.
- Trading through news without a plan. Spreads can widen and stops can fill worse than expected.
- Too much size. The biggest danger on gold is simply being too large. One normal move can hurt badly.
Practice before you risk money
The gold trading simulator replays real market days candle by candle with the date hidden, in XAUUSD lots or in GC and MGC futures, with stops, targets and a journal. Charts are built from the real trades of the GLD ETF during New York hours, converted to the gold price scale. Practice results don't promise real results.
Questions
- What is XAUUSD?
- The price of one ounce of gold in US dollars. XAU is the code for gold and USD is the US dollar. A price of 2,700 means one ounce costs $2,700.
- How much is 1 lot of gold?
- Usually 100 ounces. A $1.00 move in the price makes or loses $100 on one lot, and $1 on 0.01 lots.
- What is the best time to trade gold?
- Most of the volume comes during the London and New York sessions, especially when they overlap, roughly 8:00 to 12:00 New York time. Asian hours are usually quieter.
- How much money do I need to trade gold?
- You can start small with 0.01 lots, but gold moves a lot. A $10 stop on 0.01 lots costs $10, so 1% risk on that stop needs a $1,000 account. Practice first, on a simulator.
- What is the difference between XAUUSD and GC futures?
- XAUUSD is usually a spot or CFD price from a broker, traded in lots. GC is a futures contract on the COMEX exchange for 100 ounces, and MGC is its 10 ounce micro version. They follow nearly the same price, but costs and rules differ.