Gold is the instrument most retail traders drift towards and the one fewest of them have read the specification for. It sits in the forex section of most platforms, is quoted like a currency pair, and then behaves like a commodity, which is a combination that produces predictable mistakes.
What XAUUSD actually is
XAU is the commodity code for one troy ounce of gold, from the Latin aurum. XAUUSD is therefore the price of one troy ounce in US dollars, written in the format of a currency pair with gold as the base and the dollar as the quote.
You are not buying gold. A CFD on XAUUSD is a contract with your broker whose value tracks that price. Nothing is delivered and nothing is stored.
The contract size that catches everyone
One standard lot of XAUUSD is 100 troy ounces, not 100,000 units. A trader moving from EURUSD who assumes the lot size carries across is out by a factor of a thousand, and it is the most common sizing error in this instrument.
Gold is quoted to two decimal places, so a one dollar move is 100 ticks of 0.01. Some platforms call the 0.01 a pip and some call the dollar a pip, which means two traders can describe the same move with a hundredfold difference between them. Establish which your platform means before you size anything.
Worked through: 0.1 lots is 10 ounces. A move from $2,400 to $2,415 is $15 per ounce, so $150 on the position. If that arithmetic surprises you, it is worth doing on paper before doing it with money.
When it moves
Gold trades from the Sunday evening open to the Friday close, with a short daily break at the rollover. The London and New York overlap carries the most participation, and the London over-the-counter market runs roughly 08:00 to 17:00 UK time with the LBMA benchmark set at 10:00 and 15:00.
It also does not trade at weekends, which matters more in gold than in most markets because it reacts to news and news does not observe the trading week. A position held over a weekend can reopen at a price your stop never saw.
Why it behaves differently
A currency pair is a relationship between two economies. Gold is an asset that is nobody's liability, which is a genuinely different thing and the reason it responds to a different set of pressures.
- It is priced in dollars, so dollar strength and gold price often move against each other without anything happening to gold itself.
- It pays no yield, so the return available on other safe assets changes its relative appeal.
- Central banks are persistent buyers. They bought 863 tonnes in 2025, down 21% on the previous year and still far above the historical norm, which is a strand of demand that behaves nothing like a leveraged speculator.
- It carries a reputation as a store of value, which means sentiment and geopolitics reach it faster than they reach most instruments.
None of that is a trading signal and it is not a reason to expect any particular direction. It is context, and context tells you how a market might behave when conditions change rather than what it will do next.
What it means practically
Gold moves further in a session than most currency pairs, which means a stop placed at a currency-pair distance is inside the noise. Widening the stop is the correct response, and the arithmetic then requires a smaller position rather than the same one.
That is the whole discipline, and it is the same as it is anywhere. Risk stays fixed, size moves. Gold simply punishes getting it wrong faster.
Where to start
- Read your broker's specification for XAUUSD: contract size, tick value, margin requirement, trading hours and swap.
- Work out what a one dollar move is worth on the size you are considering, before placing anything.
- Decide your stop from where the idea is wrong, then size to it. Never the other way round.
- Watch it through several sessions before trading it, so the range it covers in a day is something you have seen rather than read.
Nothing here is a strategy and none of it is advice. It is the specification and the context, which is what has to be understood before a strategy means anything at all.
Written for education, not as advice. Echelon is not authorised to give personal recommendations and nothing here takes account of your circumstances. Trading carries risk and most people who trade lose money. Read the risk disclosure.