What Is XAUUSD? Gold Trading Explained

Reading the quote

The name follows the ISO 4217 currency-code convention. XAU is the code for gold (the X marks something that is not a national currency, AU is the chemical symbol, from the Latin aurum); USD is the US dollar. So XAUUSD reads like any currency pair: how many dollars one unit of gold costs.

MT5 shows two prices. The bid is what you can sell at, the ask what you can buy at, and the gap between them is the spread. A buy opens at the ask and is valued at the bid, so every new position starts slightly negative by exactly the spread.

Troy ounce

The unit precious metals are priced in: 31.1035 grams, about 10% heavier than the everyday (avoirdupois) ounce of 28.35 g.

What you are actually trading

Gold trades in several forms, and the one in your MT5 terminal is rarely the metal itself:

Retail XAUUSD prices are derived from the professional gold market — the London over-the-counter market, where the twice-daily LBMA Gold Price is set, and COMEX futures. Your broker streams its own bid and ask around those prices, which is why two brokers never show exactly the same quote.

Contract size: what one lot is worth

Everything about sizing a gold trade comes down to one multiplication. At the common contract size of 100 ounces per lot:

A $10 move is an ordinary day's travel for gold, not an extreme one, so position size matters more here than on most currency pairs. XAUUSD lot size explained walks through sizing a position from a stop distance and a risk budget.

Points, pips and why they confuse everyone

In MT5 a point is the smallest price step the symbol is quoted in. On a two-decimal gold quote that is $0.01; on a three-decimal quote it is $0.001 — so "50 points" can mean $0.50 on one broker and $0.05 on another. Pip has no fixed meaning on gold at all: traders use it for $0.01, $0.10 or $1 depending on who taught them.

What it costs to trade

• Spread — paid on every trade, the moment it opens. Wider at the daily rollover, in thin hours and around major news. See XAUUSD spread explained.
• Commission — some account types charge a fixed fee per lot instead of (or on top of) a wider spread.
• Swap — the overnight financing charge on positions held past the broker's rollover time.
• Slippage — the difference between the price you asked for and the fill, largest when the market moves fast.

For a strategy that trades often and aims for small gains per trade, these costs are not a footnote; they are a large share of the result. Test with realistic costs, not a zero-spread simulation.

How gold behaves

Gold has no earnings or coupon, so its price is driven by what holding it costs and what it protects against. The main forces are covered in what moves the price of gold; in short:

• Real interest rates — higher inflation-adjusted yields make a non-yielding asset less attractive, and the reverse.
• The US dollar — gold is priced in dollars, so a stronger dollar tends to weigh on the price.
• Fear — war, financial stress and political shocks send money into gold quickly.
• Scheduled US data — inflation, jobs and Federal Reserve decisions produce sharp, fast moves around the release time.

Activity follows the clock: the London and New York sessions carry most of the volume, and the hour after major US releases is often the most violent of the day. XAUUSD trading hours maps it out.

Trading XAUUSD with automation

Gold's round-the-clock week and its fast reactions make it a common market for Expert Advisors: a program in the MT5 terminal does not sleep through the Asian session or hesitate at 14:30 on a data day. The same features are what make automated gold trading risky — an EA keeps executing its rules through a move no human would have stayed in. What an Expert Advisor is covers how they work and where they fail.