XAU/USD explained: what moves gold, and what $1 is worth
Gold pays no interest and has no earnings report. So why does its price move so much? Mostly because of what people expect from the dollar and interest rates.
At a glance
| XAU/USD | |
|---|---|
| What it is | The price of one troy ounce of gold in US dollars ("XAU" is gold's currency code) |
| Price step | Quoted to $0.01. Brokers differ on what they call a "pip" ($0.01 or $0.10) |
| What a move is worth | 1 lot is usually 100 oz, so a $1 move = $100 per lot, $10 per 0.1 lot, $1 per 0.01 lot |
| Busiest hours (ET) | London, about 3 am – noon, strongest in the 8 am – noon overlap |
| What moves it most | US real yields, the Fed, the US dollar, fear, central-bank buying |
| Trading hours | Nearly 24 hours, Sunday evening to Friday 5 pm ET, with a short daily break at most brokers |
Lot sizes and leverage for metals vary by broker. Check your broker's contract details before you trade.
What moves it
- Real interest rates. Gold pays nothing. When rates after inflation ("real yields") rise, holding gold costs more in missed interest, and gold often struggles. When they fall, gold often does better.
- The Fed. Anything that shifts the US rate outlook: Fed decisions at 2:00 pm ET, CPI and the jobs report at 8:30 am ET.
- The US dollar. Gold is priced in dollars. A weaker dollar often helps the gold price, and a stronger one often weighs on it.
- Fear and uncertainty. Wars, banking scares and big market drops can send money into gold.
- Central banks. According to the World Gold Council, central banks bought more than 1,000 tonnes of gold a year in 2022, 2023 and 2024, far above their usual pace. Steady buying like that sits under the market.
When it's busiest
Gold's main trading centres are London and New York. The London price auctions happen at 10:30 am and 3:00 pm London time. Activity usually picks up from the London open, around 3 am ET, and peaks when New York joins. The 8:30 am ET US data releases are often the most explosive minutes of the gold day.
The Asian session is usually calmer, though demand from China and India matters over the long run. In the weeks when the UK and US clock changes don't line up, London times shift an hour in ET. The market hours tool helps.
Its personality
- Big moves in dollar terms. A $20 to $40 day isn't unusual, and news days can be much bigger. On a 100-oz lot, every $1 is $100.
- Fast on US data. CPI and jobs days can move gold several dollars in seconds.
- Long trends. Shifts in rates and central-bank demand can drive trends that last months.
The sizing example. Say your account is $10,000 and you risk 1%: $100. Your stop is $10 away from your entry. One full lot would risk $10 × 100 oz = $1,000, so your size is 0.1 lot (10 oz). A math example, not a promise. The position size calculator does it for you.
Reading it with our method
- Daily chart first. Mark the last places price turned around. Gold respects big turning points on the daily and weekly.
- Trade only in that direction on your smaller chart.
- Body close only. News spikes often push a tail far past a level and then pull back.
- Stop from the chart, then size from the math as in the box above. Wider stops mean smaller sizes.
Our guide to how interest rates affect stocks explains the rate side in more depth, and gold trading for beginners covers the different ways to trade gold.
Common mistakes
- Mixing up the "pip". Brokers define it differently. Always size in dollars per ounce, not pips.
- Trading 8:30 am ET news days at full size. Many beginners skip those minutes.
- Copying forex lot sizes. One gold lot moves far more per day than one EUR/USD lot.
- Thinking gold only goes up in a crisis. It can fall in scares too, for example when people sell everything for cash.
Questions
What does XAU/USD mean?
XAU is the code for gold, like a currency code. XAU/USD is the price of one troy ounce of gold in US dollars.
How much is a $1 move in gold worth?
On a standard 100-ounce lot, $100. On 0.1 lot, $10. On 0.01 lot, $1. Check your broker's lot size, as some differ.
Why does gold go down when interest rates go up?
Gold pays no interest. When rates rise, other safe places to keep money pay more, so holding gold becomes less attractive. It's a strong tendency, not a fixed rule.
What is the difference between XAU/USD and gold futures?
XAU/USD is a spot price offered by brokers. Gold futures (GC) trade on an exchange with set contract sizes and expiry dates. See our GC futures page.
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