Gold trading basics: learn before you trade.

What does XAU/USD mean?

XAU is the code for gold and USD is the US dollar. XAU/USD is the price of one troy ounce of gold in US dollars. A troy ounce is about 31.1 grams, a little heavier than a normal ounce.

So if XAU/USD shows 4,000.00, one ounce of gold costs US$4,000 (illustration only). If the price rises, gold has got more expensive in dollars; if it falls, cheaper.

Because gold is priced in dollars, a UK trader's results are also affected by the GBP/USD exchange rate.

When does gold trade? (UK time)

Gold trades almost 24 hours a day, Monday to Friday. On most trading platforms it opens on Sunday evening (around 23:00 UK) and closes on Friday evening (around 22:00 UK), with a short daily break of roughly an hour. Exact hours vary, so check your platform.

Big US data like inflation (CPI) and jobs (NFP) is usually released at 13:30 UK time, and US Federal Reserve rate decisions usually come at 19:00 UK time. For a couple of weeks in March and October/November, when the UK and US change clocks on different dates, these move an hour earlier.

What tends to move gold?

There are no fixed rules, only tendencies. These are the usual suspects:

• US interest-rate expectations. Gold pays no interest, so when rates (especially real, after-inflation rates) are expected to rise, gold often comes under pressure, and the reverse.
• The US dollar. Gold is priced in dollars, so a stronger dollar can weigh on it. Not every day, though.
• Inflation and jobs data. Releases like CPI and NFP can cause sharp, fast moves.
• Risk and uncertainty. In worrying times some people buy gold as a perceived safe haven.
• Big buyers. Central-bank and investment demand can matter over the longer term.

Habit worth building: check an economic calendar before you even look at a chart. There's more detail in What moves gold?

How most people trade gold, and why leverage matters

Most retail traders don't buy physical gold. They use CFDs (contracts for difference) or spread bets: you bet on the price moving without owning the gold. These are leveraged: you put down a deposit (margin) and get a much bigger exposure.

Example (illustration only): with 5% margin, £500 controls £10,000 of gold. A 5% move against you wipes out the whole £500. Gold can move several percent in a short time.

For retail clients, FCA-authorised CFD providers must follow FCA rules (COBS 22.5):

• Margin of at least 5% on gold, which means leverage of up to 20:1
• Positions closed out if your account equity falls to half the required margin
• Negative balance protection, so you can't lose more than the money in your account

Providers that aren't authorised in the UK don't have to follow these rules. Always check a firm on the FCA Register and the FCA Warning List before you consider it.

Spreads, gaps and slippage

• Spread: the difference between the buy and sell price. It's a cost, and it often widens around news and at the daily open.
• Gap: the price can jump from one level to another with no trades in between, e.g. over a weekend.
• Slippage: in fast markets your order (including a stop loss) can be filled at a worse price than you set.

So a stop loss limits risk but doesn't guarantee the exact loss.

How to read a trade plan (the concept)

Every planned trade, whoever's idea it is, should answer three questions before entry:

1. Entry: where would I get in, and why there?
2. Stop loss: where is the idea clearly wrong?
3. Target: where would I take profit?

Risk:reward (abstract example, not a trade): entry 100, stop 95, target 110. You're risking 5 to potentially make 10, a 1:2 risk:reward. It says nothing about the chance of winning; it's just maths you should know before you start.

Illustration only, not a recommendation to buy or sell anything.

Practise before you risk money

Open a free demo account on the platform you want to learn (for example MetaTrader 5) and practise placing, moving and closing orders, setting stops, and logging every trade. If you can't explain how a trade could lose money, it isn't time for real money.

Want the structured version? The free 7-Day Gold Basics guide (download the PDF) walks you through all of this, a day at a time.