How to Trade Gold (XAU/USD) CFDs: A Beginner's Guide

Gold is one of the most actively traded markets in the world. It's quoted against the US dollar as XAU/USD and is popular with traders because it tends to move well, reacts clearly to economic news and is easy to follow. Here's what you need to know before trading it as a CFD.

What is a gold CFD?

A gold CFD lets you speculate on the price of gold without buying physical bullion or futures. You can go long if you think the price will rise or short if you think it will fall. Your profit or loss is the difference between your opening and closing price, multiplied by your position size.

How gold is quoted

XAU/USD shows the price of one troy ounce of gold in US dollars. A common contract size for one lot is 100 ounces, but contract sizes vary, so always check the specifications in your platform.

With a 100-ounce contract, a $1 move in the gold price is worth $100 per lot, and a $0.10 move is worth $10 per lot. Because gold can move tens of dollars in a day, position sizes are often smaller than on forex pairs.

What moves the gold price?

• Interest rates. Gold pays no interest, so it often weakens when real interest rates rise and strengthens when they fall.
• The US dollar. Because gold is priced in dollars, a stronger dollar often weighs on gold and a weaker dollar supports it.
• Inflation. Many investors treat gold as a store of value when inflation is high.
• Risk sentiment. Gold often attracts buying during financial or geopolitical stress.
• Central bank and investor demand. Large purchases or sales by central banks and funds can influence the trend.

Key US releases such as inflation data, jobs reports and Federal Reserve decisions often move gold sharply. Track them on the economic calendar.

When to trade gold

Gold trades almost 24 hours on weekdays, but activity tends to pick up during the London session and especially when New York opens. See our trading hours page.

Managing risk on gold

• Expect bigger swings. Gold's daily range can be large, so give stops enough room and size down to compensate.
• Always use a stop-loss. News can move gold quickly in either direction.
• Calculate before you click. Use the position size calculator (select XAU/USD) and check margin with the margin calculator.
• Mind the costs. Check the spread and overnight financing in TradeLocker, especially if you plan to hold for days.

A simple example

You buy 0.10 lots of XAU/USD (10 ounces on a 100-ounce contract) with a $15 stop-loss. If the stop is hit you lose about 10 × $15 = $150 plus costs. If price rises $30 to your target, you make about $300 before costs. Prices here are illustrative only.

CFDs are leveraged products and you can lose your money. This article is for education only and is not investment advice.