What is gold trading
You're not buying physical bars. You're buying CFDs — contracts for difference — that mirror the spot price of one troy ounce of gold (XAU) priced in US dollars. With 1:100 leverage, $1,000 of margin controls one full standard lot (100 oz, ~$200,000 notional at $2,000/oz).
Why traders pick gold
- Safe-haven flows — capital rotates into gold during stress (wars, banking crises, currency devaluations).
- Inflation hedge — gold preserves purchasing power across decades.
- Liquidity — $130–$200B daily volume. Almost zero slippage during peak hours.
- 24-hour market — clean continuation between sessions, unlike single stocks.
- Strong technicals — gold respects round numbers, swing highs/lows, Fibonacci levels.
What moves XAUUSD
- Fed funds rate — inverse correlation. Higher rates = lower gold.
- DXY (dollar index) — strong inverse. Gold is priced in USD.
- Real bond yields (TIPS) — falling real yields = bullish gold.
- CPI / PCE inflation — hot prints = bullish.
- Geopolitics — wars and sanctions drive safe-haven bids.
- Central bank purchases — 1,000+ tonnes/year by global CBs since 2022.
Four working strategies
1. Trend following
50 EMA + 200 EMA. Long when price holds above both and 50 > 200. Short when reversed. Stop beyond the recent swing; trail with the 50 EMA.
2. Breakout
Mark a 1–4h consolidation range. Enter on the close beyond the range; stop at the opposite boundary; first target = range height projected from the breakout.
3. News trading
NFP, CPI, FOMC. Wait for the first 5-minute candle to close, then trade the trend it sets. Pre-news stops should be 1.5× the average reaction.
4. Support / resistance
Mark horizontal levels on the daily and 4h. Enter on the second touch with a confirmation candle. Stop just beyond the level. Target the next major level or 2R, whichever comes first.
Risk management (the only thing that matters)
- 1–2% per trade — never more. Use the lot-size calculator to compute the exact lots from your account, risk %, and stop pips.
- Stop placement — beyond a swing high/low, an ATR multiple, or a key level. Never below a round number where retail stops cluster.
- R:R ≥ 1:2 — at 1:2, a 34% win rate breaks even. At 1:3, 26%.
- Avoid weekends and FOMC weeks — reduce size to 0.5%. Gold gaps on weekends.
Best time to trade gold
The London-NY overlap (13:00–17:00 GMT) is the single best window — tightest spreads, deepest liquidity, biggest moves. The US data window (13:30–15:00 GMT) prints the volatility. Avoid Asia (low volume) and the daily settlement break.
Common mistakes
- Over-leveraging — using 1:500 because the broker offers it.
- No stop loss — "I'll close it if it goes against me." You won't.
- Revenge trading — doubling up after a loss.
- Ignoring the Fed calendar.
- Trading without a written plan.