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What is XAUUSD: The Ultimate Guide

Updated: May 02, 2024
Upendra Goswami
Contributor
Opinions expressed by Traders Union Contributors are their own.
Reviewed by
Dr. BJ Johnson
Editor
Fact-checked by
Mirjan Hipolito
Cryptocurrency and stock expert
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Table of Contents

  • What is XAUUSD?
  • How to trade XAUUSD
  • Best Forex brokers
  • Factors, affect the price
  • Conclusion
  • Related articles
Editorial Note: While we adhere to strict Editorial Integrity, this post may contain references to products from our partners. Here's an explanation for How We Make Money. None of the data and information on this webpage constitutes investment advice according to our Disclaimer.

XAUUSD is the symbol for the spot gold exchange rate on the foreign exchange market. Gold (XAU) is traded against the US dollar (USD), and its price represents the cost of one ounce of gold in USD. The XAUUSD symbol is usually used in terminals provided by forex brokers.

XAUUSD is a financial symbol that represents the exchange rate between gold (XAU) and the US dollar (USD). Traders use this pairing to speculate on the price movements of gold in relation to the US dollar.

Understanding XAUUSD includes examining the factors that influence both gold and the USD, making it a critical instrument in the world of forex and commodities trading.

  • What is the meaning of XAUUSD in forex?

    XAUUSD in forex depicts the exchange rate between gold (XAU) and the US dollar (USD). It represents how much one unit of gold is valued in terms of US dollars in the global financial markets.

  • What is the difference between gold and XAUUSD?

    Gold is the physical precious metal, while XAUUSD is the forex symbol representing its exchange rate with the US dollar.

  • Is XAUUSD a currency or commodity?

    XAUUSD is a commodity pair in forex that represents the exchange rate between gold (XAU) and the US dollar (USD).

  • Is XAU pure gold?

    XAU is the financial symbol for 99.99% purity bank gold. However, forex trading with XAUUSD does not mean that you will be dealing with physical bullion.

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What is XAUUSD?

In XAUUSD, the symbol XAU represents gold. It signifies the exchange rate between gold and the US dollar, displaying the value of the precious metal expressed in currency.

Metatrader

Metatrader

The XAU/USD quote changes during the 24/5 business day with a short break at night when trading in gold futures on New York's COMEX exchange is paused.

Gold trading activity is very variable intra-day, so it's important to read the article: What Is The Best Time To Trade Gold Forex?

How to trade XAUUSD

To perform a successful trade XAUUSD, here are 5 steps that you can follow:

  1. Select a Trading Platform: Select a reputable forex trading platform that offers XAUUSD as a tradable instrument. You can look for the platform that has superior rating in terms of trading speed and liquidity.

  2. Market Analysis: Conduct thorough analysis of gold and USD factors using technical and fundamental analysis. It helps you in developing a basic understanding of the gold market and analyzing the trends which may impact gold prices.

  3. Risk Management: Set clear risk management parameters, including stop-loss and take-profit levels, to protect your investment.

  4. Execute Trades: Place your trades based on your analysis, follow the direction you believe XAUUSD will move. It requires a deep understanding of technical and fundamental parameters which can develop with the passage of time.

  5. Monitor: Keep a close eye on market trends and news. Adjust your strategy as required to respond to changing conditions. Events like interest rates change or inflationary control measures will impact the gold prices, act accordingly.

Choosing the right forex broker to trade XAUUSD could be an exhausting task. This article will help you understanding the ideal steps you can take to choose the right broker to start your trading carrier: How to choose a Forex broker wisely

Best brokers for XAUUSD trading

1
9.4/10
Go to broker
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest.
Minimum deposit:
$50, $100 (for UK clients)
Bonus for deposit:
0%
Regulation:
CySEC, FCA, ASIC
Review

The eToro broker was founded in 2007. The company promotes itself as a social trading platform working with traders from over 140 countries. The broker has several divisions operating under different jurisdictions and licensed by different regulators. For example, eToro (Europe) is licensed by the Cypriot regulator CySEC (109/10) and eToro (UK) is licensed by the British regulator FCA (583263). The broker also has a representative office in Australia and the USA. eToro Profile Details

Pros/Cons

•the minimum transaction amount for copying is $1;

•handy functionality for passive investing;

•regulated by independent monitors;

•it is possible to purchase contracts for fractional shares (that is, to invest amounts less than the cost of one share);

•it is possible to buy shares at once (not CFDs) on the US stock exchanges.

•high spreads;

•periodic technical failures in order execution;

•lack of the most popular platforms such as MetaTrader 4 and MetaTrader 5 in Europe and the CIS;

•no access to ECN systems, orders are processed only according to the STP (straight-through processing) scheme with access to specific liquidity providers;

•there is a commission for withdrawing funds;

•impolite support staff;

•inconvenient website.

Study Review
2
9.2/10
Go to broker
Your capital is at risk.
Minimum deposit:
No minimum
Bonus for deposit:
0%
Regulation:
FSC (BVI), ASIC, IIROC, FCA, CFTC, NFA
Review

The name OANDA is an acronym for “Olsen & Associates” or “Olsen AND Associates”. It is registered in the United States and provides its clients with a wide range of financial services in most countries of the world. The company was founded in 1996 and is currently regulated in four jurisdictions. The main regulator of the broker is the UK Financial Conduct Authority (FCA). Oanda Canada is licensed by IIROC. The company has several significant awards to its credit, including a victory in the category "Best Forex Trading Technologies" from the UK Forex Awards, "Best Trading Platform" from FX Week, as well as "Best Customer Service" from the US Foreign Exchange Report.

Pros/Cons

•Minimum deposit from 1 dollar.

•A large selection of the most popular trading instruments.

•Several reliable and reputable financial regulators.

•Inconvenient and poorly functioning site.

•Lack of cent accounts.

•Lack of bonus programs.

Study Review

Factors that affect the price of XAUUSD

The various factors affecting the price of XAUUSD include:

Economic Conditions: The overall economic health of countries can impact the XAUUSD. Economic instability or downturns may implore investors preferences toward gold as a safe-haven asset, influencing its price.

Political Uncertainty: Political instability or geopolitical tensions can increase demand for gold as a hedge against uncertainty. Traders often turn to gold during times of geopolitical risk, affecting XAUUSD prices.

Interest Rates: Changes in interest rates, especially in the United States, can impact XAUUSD. Higher interest rates may strengthen the US dollar, usually leading to a decrease in gold prices, and vice versa.

Inflation: Gold is often noted as a hedge against inflation. When inflation increases, the real value of currencies may fall, and investors may turn to gold as a store of value, influencing XAUUSD prices.

Forecasting gold prices will be useful for traders who are looking forward to trade in XAUUSD, here is the detailed analytics of gold prices: Gold Analysis Today – XAU/USD Support and Resistance

Conclusion

In XAUUSD, the US Dollar (USD) is the currency against which the price of gold (XAU) is quoted. XAUUSD represents the price of 1 ounce of gold (XAU) quoted in United States dollars (USD). The quote changes 24/5, offering speculation and investment opportunities.

Glossary for novice traders

  • 1 Broker

    A broker is a legal entity or individual that performs as an intermediary when making trades in the financial markets. Private investors cannot trade without a broker, since only brokers can execute trades on the exchanges.

  • 2 Trading

    Trading involves the act of buying and selling financial assets like stocks, currencies, or commodities with the intention of profiting from market price fluctuations. Traders employ various strategies, analysis techniques, and risk management practices to make informed decisions and optimize their chances of success in the financial markets.

  • 3 Forex Trading

    Forex trading, short for foreign exchange trading, is the practice of buying and selling currencies in the global foreign exchange market with the aim of profiting from fluctuations in exchange rates. Traders speculate on whether one currency will rise or fall in value relative to another currency and make trading decisions accordingly.

  • 4 Risk Management

    Risk management is a risk management model that involves controlling potential losses while maximizing profits. The main risk management tools are stop loss, take profit, calculation of position volume taking into account leverage and pip value.

  • 5 Take-Profit

    Take-Profit order is a type of trading order that instructs a broker to close a position once the market reaches a specified profit level.

Team that worked on the article

Upendra Goswami
Upendra Goswami
Contributor

Upendra Goswami is a full-time digital content creator, marketer, and active investor. As a creator, he loves writing about online trading, blockchain, cryptocurrency, and stock trading.

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Dr. BJ Johnson
Dr. BJ Johnson
Developmental English Editor

Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.

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Mirjan Hipolito
Mirjan Hipolito
Cryptocurrency and stock expert

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).

Read more