Blog / Fundamental

How to Trade Gold (XAU/USD): What Moves It and How to Plan Trades

Gold reacts to real yields, the dollar and fear. Learn the main drivers, contract size and a basic risk plan for XAU/USD.

Why gold moves

Gold pays no interest, so it competes with bonds. When real (inflation-adjusted) yields fall or the US dollar weakens, gold tends to rise; when they rise, gold often struggles. It also attracts buying during uncertainty and central banks are significant buyers.

Contract basics

At most brokers, one standard lot of XAU/USD is 100 ounces, so a $1 move equals about $100 per lot. Gold can move $20-$40 in a day, so size small. Spreads can widen sharply around news.

Technical behaviour

Gold respects round-number levels and prior highs and lows, and trends strongly on higher timeframes. Many traders use the daily chart for bias, then the 1-hour for entries.

A risk plan

Place the stop based on the chart or on ATR, not on a fixed dollar amount, and risk around 1% per trade. Avoid holding large positions through US inflation, jobs and Fed decisions unless that is part of your plan.

Example: sizing a gold trade

Account $10,000, risk 1% = $100. Gold is at $2,400 and your stop is $15 away. At $100 per $1 per lot, the risk per lot is $1,500. Size = $100 รท $1,500 = 0.067 lots, so 0.06 lots is the practical choice.

Many brokers allow 0.01 lot sizes, which let you size gold sensibly even on a small account.

Related markets to watch

The US dollar index, 10-year Treasury yields and inflation-adjusted yields often explain gold's daily moves. Silver tends to follow gold with larger swings. Gold mining shares react to both the gold price and company costs. Knowing what moved the dollar and yields in the last hour helps explain what happened in gold.

Time of day matters

Gold is most active during the London and New York sessions, particularly around 13:30 UTC when many US data releases occur. Liquidity is thinner in the Asian session, which can produce sharper spikes on small orders. Plan entries and stops around those hours.

Key takeaways

  • Gold reacts to real yields and the dollar.
  • 1 lot = 100 oz.
  • Size small; it is volatile.
  • Plan around US data.

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Educational content, not financial advice.