Currently, many new investors are entering the market and often do not clearly distinguish the differences between asset types. Some people trade gold without paying attention to the special factors of this market. For an overview of XAUUSD trading. Let’s learn about the size of 1 XAUUSD lot and the value of 1 XAUUSD pip. Along with that, it is necessary to consider important things to keep in mind when participating in gold trading. Learn about effective strategies at Learn Forex Trading!
What is XAUUSD? How to make XAUUSD Trading effective?
Gold prices often increase during periods of economic instability, this is widely known. Currently, the gold trading period is becoming more exciting in markets, especially in the Forex market. XAUUSD, or simply gold. Considered one of the indispensable assets in the trading portfolio of famous Forex brokers.
This is also the favorite trading tool of many traders, whose popularity is always at the top of the list.
In the Forex market, Gold is often represented by the symbol XAU. It is most commonly traded with the US Dollar. Expressed through XAU/USD pair – exchange rate between gold price and US Dollar.
To explain further, the symbol XAU is derived from the word AU. From Latin, XAU means gold. The suffix X can represent the Forex market in currency pairs. Therefore, XAU can be understood as gold in the context of the Forex market. USD, which is the US Dollar, is the counterparty in the trading pair.
So, XAUUSD represents the price of gold against the US Dollar.
In addition to the main representation in USD. Some exchanges also offer gold price representations in different currencies. For example, EUR and GBP, are denoted as XAUEUR and XAUGBP. However, when it comes to gold in the context of the Forex market. Of course usually only refers to XAUUSD trading.
See more: You will regret not knowing about XAUUSD
What is the price of XAUUSD between 1 lot and 1 pip?
When making a trade with 1 lot of Gold standard (1 lot of XAUUSD). This means you are buying 100 ounces of gold. In this case, every 1 pip move of XAUUSD. Equivalent to 0.01 price step, will bring you a profit of 1 USD.
For example, if you buy 1 lot of XAUUSD (100 ounces of gold) when the gold price is 1535.00 and it rises to 1535.05 (equivalent to 5 pips of XAUUSD). At this point, you will earn a profit of 5 USD. Similarly, when you buy 1 lot of XAUUSD when the gold price is 1527.10 and rises to 1527.20 (equivalent to 10 XAUUSD pips), you will earn 10 USD.
To summarize, the lot and pip value rules for XAUUSD are as follows:
- 1 lot XAUUSD = 100 ounce
- 1 XAUUSD mini lot (0.1 Gold standard lot) = 10 ounces
- 1 micro lot of XAUUSD (0.01 Gold standard lot) = 1 ounce
- 1 pip XAUUSD = 1 USD
- 1 pip XAUUSD – calculated according to 1 mini lot = 0.1 USD
- 1 XAUUSD pip – calculated according to 1 micro lot = 0.01 USD
What is the relationship between trading gold and the USD?
Gold, a rare metal, has been around for a long time and since ancient times it has been used in commodity exchange, placing gold as a common currency. In contrast, the USD is the official currency of the United States of America and today it is often used by investors to profit from exchange rate differences.
Gold and the USD often have an inverse relationship. This relationship comes from the properties of gold, which is considered an effective tool to prevent inflation. Meanwhile, the USD plays an important role, especially based on market interest rates.
When the value of the USD decreases, purchasing gold requires a larger amount of USD, leading to an increase in the value of gold. Conversely, when the value of the USD increases, purchasing gold requires less USD, reducing the value of gold in USD terms.
In short, the inverse relationship between gold and the USD is very clear. However, it should also be noted that gold also has a relationship with other currencies, but the relationship with the USD is often considered special and accounts for a large proportion of the foreign exchange reserves of countries around the world.
Does XAUUSD trading have potential?
In fact, in the Forex market, choosing currency pairs can be a challenge for investors. They face difficulty in finding currency pairs that have wide spreads and high volatility to ensure maximum profit potential.
However, when it comes to the XAUUSD pair, what is it? It is different from other currency pairs. This currency pair involves two of the most popular currencies in the world, whose values always experience fluctuations. In short, XAUUSD trading is still considered a potential type if investors want to optimize their chances of getting rich.
What are the factors that influence the price of XAUUSD?
The price of the XAUUSD index is often influenced by many different factors, and below are some important factors that are commonly monitored:
Change in USD price:
When the USD price tends to increase, the gold price often decreases and vice versa. This is due to the tendency to use the USD as a safe asset when the market is unstable.
Gold Reserve policy of Central Banks:
Changes in gold reserve policies of Central Banks can affect the supply and demand of gold in the international market.
Economic Index:
Data on inflation and interest rates often strongly influence gold prices. Low inflation and high-interest rates may increase the price of gold as it is a more attractive option.
Supply – Demand Relationship:
When the demand for gold increases strongly, the supply is not enough. Gold prices can increase quickly and vice versa.
Effective XAUUSD trading strategy in the Forex market
Trading XAUUSD can be done on gold exchanges or Forex exchanges. To apply an effective gold trading strategy, here are some things to keep in mind:
Linked to the situation of the economy:
Gold is often closely linked to the global economic situation. During periods of instability or economic recession, gold prices often increase due to its role as a safe asset.
Transaction costs:
Gold trading often has large spreads and requires a significant deposit, which should be considered carefully. You should choose an exchange with reasonable fees and trading conditions.
Spot exchange rate:
Spot rates are often used to monitor and analyze gold trends. Currency pairs such as XAU/USD, EUR/USD, and USD/JPY are strongly correlated and can provide useful information about gold’s movements.
Technical and fundamental analysis:
Use both technical and fundamental analysis to evaluate market conditions and make trading decisions. Indicators such as Moving Averages, RSI, and important economic events can be tracked.
Political situation and global events:
Information about political situations and international events can also strongly affect gold prices. Volatility due to this event needs to be evaluated and accounted for in the trading strategy.
See more: How to register ICMarkets broker account
What are the top reputable exchanges in UK for XAUUSD gold trading?
Choosing a safe and reputable XAUUSD trading floor is very important when you want to participate in trading the XAUUSD currency pair on the Forex market.
Top reputable forex exchange when XAUUSD trades effectively
To choose a safe online XAUUSD trading platform, people can refer to and research further:
When choosing an online gold trading platform, there are a number of important criteria you should consider to ensure the trading environment is safe, efficient, and suitable for your personal needs. Here are some important criteria listed:
- Forex trading platform licenses and regulations
- Make sure the trading exchange commits to customer information security
- Deposit and withdrawal methods
- Spreads and trading fees
- Leverage and Margin
- Customer service
Should I trade XAUUSD online or not?
There is no assumption that any form of investment guarantees a profit. Especially in the case of the Gold and US Dollar pair. These two factors are closely linked, creating fluctuations and discrepancies that can reach significant levels. However, as usual, opportunities often come with risks. With enough knowledge, investors can exploit opportunities to achieve large profits.
Besides, investing in gold online brings many advantages compared to investing in traditional physical gold. Some specific points include:
- Simple and safe investment
- Does not require much capital
- High Liquidity
- High Leverage Support
Conclude
There have been many traders who have achieved success in the Forex market only through XAUUSD trading. This is truly a testament to the ability of this asset class to bring attractive returns. Now, let’s start from the most basic concepts with Learn Forex Trading. From re-evaluating XAUUSD, understanding clearly about 1 lot of XAUUSD, 1 pip of XAUUSD… To be able to trade gold online simply and effectively, especially suitable for new traders.
FAQ
Overview of the definition of XAUUSD?
What is XAUUSD? It is the market symbol for the currency pair between gold (XAU) and the US dollar (USD) in the Forex market.
1 lot of XAUUSD is equivalent to how much gold?
1 lot of XAUUSD is equivalent to 100 ounces of gold.
What are the benefits of trading gold online?
Online gold trading offers simplicity, safety in storage, high leverage, and great liquidity. Making it a popular choice for many new investors.
