What is Gold (XAUUSD)?
What is Gold (XAUUSD)?
Introduction to Basic Knowledge, Characteristics and Recommendations
What is FX Gold (XAUUSD)?
What is FX Gold (XAUUSD)?
Gold in FX refers to a contract for different transactions involving the price of gold. It is denominated in US dollars, that is, the exchange rate between gold and the US dollar is expressed as XAU/USD.
The price of gold (XAUUSD) is measured in troy ounces. Also, remember that 1 lot = 100 troy ounces.
Features of FX Gold (XAUUSD)
Features of FX Gold (XAUUSD)
There are three characteristics of gold (XAUUSD) in FX.
✅Characteristics of gold (XAUUSD)
- Price fluctuations are intense
- Long-term upward trend
- Gold is bought in times of crisis
- Intense price fluctuationsFX gold (XAUUSD) has a high volatility. Gold often fluctuates by several tens of dollars a day, and since its price fluctuations are more volatile than foreign exchange, you can aim for profits even in the short term.
Gold can lead to large profits, but it can also easily lead to large losses, so trades require thorough risk management.
To manage risk, you should first implement stop losses.
Beginners should be careful not to trade with the sense of the exchange rate, as the price fluctuations can be drastic and you may incur losses. On the other hand, for advanced traders, this may be a stock that can make a lot of money. - Long-term upward trendFX gold (XAUUSD) is in an upward trend in the long term, and even if it falls sharply, it is reliable that the price will bounce back.
Physical gold has long been traded as something valuable, and its value is guaranteed, so its price movements are stable. Since its price movements are stable and it is on an upward trend, it is a stock that is easy to trade by taking advantage of the price difference. - Gold is bought in times of emergencyWhen the economic situation worsens due to war or other reasons and the value of legal tender falls, gold (XAUUSD), which has a stable value, is bought to prevent assets from decreasing.
In fact, when the events between Russia and Ukraine began in 2022, gold was bought in large quantities and the price soared. Taking advantage of this, it is also possible to trade gold fundamentally.
Comparing overseas FX brokers that offer FX with gold
Comparing overseas FX brokers that offer FX with gold
We compared overseas FX brokers that offer FX with gold (XAUUSD) on the following four points.
✅ 4 ways to compare overseas FX brokers that offer FX with gold (XAUUSD)
- FX Gold spread comparison
- FX Gold leverage comparison
- FX Gold swap point comparison
- FX Gold bonus/campaign comparison
We will explain each of the four points in detail below.
- Comparison of FX Gold SpreadsWe will compare the spreads of FX Gold with four other companies. (Unit: pips)
The spread is the difference between the buy price and the sell price, and accumulates as a loss every time you trade. The spread varies depending on the stock and exchange, so if you trade a lot, you can reduce your losses by choosing an exchange with a narrow spread.
| Exchange | FxPro | XM | Axiory | HFM |
|---|---|---|---|---|
| Spread (XAU/USD) | 2.5 | 3.5 | 3.3 | 3.0 |
*As of December 2024
Looking at the table, you can see that the gold spread is 2.5 pips to 3 pips, with FxPro having the narrowest spread.
Looking at the table, you can see that the gold spread is 2.5 pips to 3 pips, with FxPro having the narrowest spread.
- Comparison of FX Gold LeverageWe will compare the maximum leverage of FX Gold at four companies.
| Exchange | FxPro | XM | Axiory | HFM |
|---|---|---|---|---|
| Maximum Leverage (XAU/USD) | 20x | 1,000x | 100x | 2,000x |
*As of May 2024, the leverage of gold (XAUUSD) varies depending on the exchange, but it can be between 100x and 1000x.
Depending on the exchange, the maximum leverage for foreign exchange and precious metals CFDs may differ, so be sure to check the leverage of the exchange you use.
Gold has high volatility and a high price per lot, so a leverage of up to 1000x is sufficient.
Depending on the exchange, the maximum leverage for foreign exchange and precious metals CFDs may differ, so be sure to check the leverage of the exchange you use.
Gold has high volatility and a high price per lot, so a leverage of up to 1000x is sufficient.
- Comparison of FX Gold Swap PointsWe will compare the swap points of FX Gold (XAUUSD) at four companies.
| Exchange | FxPro | XM | Axiory | HFM |
|---|---|---|---|---|
| Long (Buy) | -31.12 | -34.58 | -34.48 | -36.06 |
| Short (Sell) | 13.71 | 18.67 | 10.58 | 0 |
*As of December 2023
Gold (XAUUSD) swap points are negative at many exchanges. Therefore, gold is not suitable for earning money through swap points.
XM and Axiory's selling swaps are positive, so swap costs can be reduced. Also, Gem Forex has a small negative swap, so swap costs can also be reduced.
Gold (XAUUSD) swap points are negative at many exchanges. Therefore, gold is not suitable for earning money through swap points.
XM and Axiory's selling swaps are positive, so swap costs can be reduced. Also, Gem Forex has a small negative swap, so swap costs can also be reduced.
How to win with FX Gold?
How to win with FX Gold?
How to win with FX Gold:
- Trade with scalping
- Use indicators
- Setting stop loss lines
- Allowable loss is 2%
- Utilize deposit bonuses
Trade with scalping
When trading with gold, scalping is recommended.
This is because gold is highly volatile. For low volatility stocks, there is little price movement, so even if you take profits in the short term, you will not make a profit, so it is better to analyze the chart from a long-term perspective. On the other hand, gold's exchange rate fluctuates rapidly in a short period of time, so you can make a profit by taking profits when the exchange rate rises.
The specific trading method using scalping is explained in the next heading, "The recommended trading method for FX gold is scalping."
This is because gold is highly volatile. For low volatility stocks, there is little price movement, so even if you take profits in the short term, you will not make a profit, so it is better to analyze the chart from a long-term perspective. On the other hand, gold's exchange rate fluctuates rapidly in a short period of time, so you can make a profit by taking profits when the exchange rate rises.
The specific trading method using scalping is explained in the next heading, "The recommended trading method for FX gold is scalping."
Use indicators
Gold is a popular stock with a high trading volume because it is highly volatile and easy to make profits. Therefore, the accuracy of technical analysis is relatively high. In other words, it can be said that there is a high possibility that the exchange rate will move as analyzed using indicators. Be sure to use indicators actively.
Setting stop loss lines
- When trading gold, always set a stop loss.
- Gold is highly volatile, so if you take your eyes off it, the exchange rate may fluctuate and you may end up with a huge unrealized loss.
- As a result, you may end up with repeated stop losses, so always set a stop loss.
Apply the 2% rule to your acceptable losses
The 2% rule is to limit the maximum loss in a single trade to 2% of your total available funds. Following this rule will help you avoid large losses.
For example, if you have $10,000 available for investment, you should limit losses from one trade to $200 , which is 2% of $10,000.
Apply the 2% rule to gold, which is particularly volatile and risky.
Apply the 2% rule to gold, which is particularly volatile and risky.
The recommended trading method for gold in FX is scalping
The recommended trading method for gold in FX is scalping
The procedure for scalping, which is the recommended trading method for gold in FX, is as follows.
✅ Scalping procedure
- Enter after a range break
- Counter-trend after the market falls and rises sharply
- Counter-trend in a range market
- Buy on dips and sell on rallies
Below we will explain each scalping step in detail.
- Enter after range breakWhen scalping with gold (XAUUSD), it is recommended to enter after the range breaks.
A range market is a market where buying and selling intersect. Therefore, for example, if it breaks upwards, people who had placed sell orders will be stopped out and the price will rise significantly.
Also, the larger the range that is formed, the greater the growth after the break will be. In gold range markets, try to enter in the direction of the break.
- The market falls sharply, then rises sharply, then goes against the trendWhen scalping gold, it is also recommended to go against the trend when the market price fluctuates suddenly.
Gold is highly volatile, so its price is prone to sudden fluctuations. When the price is oversold or overbought (overshooting), there is often a movement to bring the price back down, so go against the trend when the price has consolidated.
Entering against the trend in the middle of a sudden fluctuation will result in a large loss, so carefully determine the bottom price before entering.
- Going against the trend in a range marketWhen scalping gold, it is also recommended to go against the trend in a range market.
In a range market, the market bounces up and down at a certain line. If you predict a bounce and enter in the opposite direction at the line, you can aim for the price range of the range.
However, be careful because if it breaks, it will fluctuate significantly in the direction of the trend.
- Buying on dips and selling on ralliesWhen scalping gold, it is recommended to simply buy on dips and sell on rallies.
Buying on dips and selling on rallies are effective for other stocks and time frames, but they can also be used to make profits when scalping gold.
Gold is highly volatile, so it may not fluctuate according to the trend line, so choose a harder entry point.
FX Gold Precautions
FX Gold Precautions
There are three things to be aware of when trading gold on FX.
Precautions when trading gold:
- There are restrictions on trading hours.
- Avoid carrying over positions as much as possible.
- Be careful not to leverage too much or hold on to positions too long.
① There are restrictions on trading hours.
Please note that there are times when FX Gold (XAUUSD) cannot be traded even on weekdays.
For FxPro, trading is not available from 5:55 to 7:05 on weekdays during summer time, and from 6:55 to 8:05 on weekdays during winter time. Market fluctuations are relatively small in the early morning, but there is a risk of holding too many positions, so be careful.
② Do not carry over positions as much as possible.
When trading FX Gold (XAUUSD), try not to carry over positions as much as possible.
Gold has high volatility, so if you carry over a position to the following week, the market may have fluctuated significantly by the time the market opens.
When carrying over a position, be sure to consider the risk of market fluctuations at the time the market closes.
③ Be careful not to leverage too much or hold too many positions.
When trading FX gold (XAUUSD), be careful not to leverage too much or hold too many positions.
Gold has high volatility and a higher price per lot than other financial products, so if you leverage too much or hold too many positions, you may suffer huge losses.
When trading gold, be sure to thoroughly manage your risk.
There is a possibility of sudden price fluctuations at market closing time when trading is not possible.
Future Outlook for Gold [Latest Considerations for 2024]
What will be the future trends for gold, which is traded by many users?
Gold is a currency with greater volatility than other currencies, so it is difficult to fully analyze its future price movements, but we will explain the future outlook for gold based on its characteristics and trends.
✅Gold outlook for the future
- Technical analysis
- Fundamental analysis
Technical analysis of gold (XAUUSD)
From here, we will explain the gold market analysis including technical analysis. Gold is currently in the midst of an upward trend.
Let's take a look at the gold chart as of May, 2024.
Currently, gold is observing the ascending channel line and Fib retracement on a daily basis.
Taking these factors into account, the trade scenario is as follows.
Let's take a look at the gold chart as of May, 2024.
Currently, gold is observing the ascending channel line and Fib retracement on a daily basis.
Taking these factors into account, the trade scenario is as follows.
Buying pattern
・Enter a buy order immediately after breaking above the upper limit of the channel. Or, after confirming that the upper limit of the channel has been broken by a candlestick of 4 hours or more, enter a buy order after checking the rebound of the roll reversal when it returns to the channel line. Stop loss when it breaks below the upper limit of the channel again and settles. Take profit at around $2676, Fib 1.272.
・Enter a buy order after checking the rebound at around $2271, Fib 0.786. Stop loss when it breaks the $2271 line and settles. Take profit at around the most recent high of $2271.
・Enter a buy order after checking the rebound at around $2271, Fib 0.786. Stop loss when it breaks the $2271 line and settles. Take profit at around the most recent high of $2271.
Selling pattern
・Enter a sell order after checking the rebound at around the most recent high of $2450. Stop loss when it breaks above $2450 and settles. Take profit at around $2271, Fib 0.786.
・If a 4-hour or longer candlestick chart confirms a break below the 0.786 Fib line near $2,271, when it returns to the 2,271 range, check for a roll reversal and enter a sell trade. Stop losses when the price breaks above the 2,271 line and settles. Take profits near the 0.618 Fib line at $2,131.
This article is merely an explanation of what the author would do, so trade at your own risk. It is not a "recommendation" to buy or sell.
・If a 4-hour or longer candlestick chart confirms a break below the 0.786 Fib line near $2,271, when it returns to the 2,271 range, check for a roll reversal and enter a sell trade. Stop losses when the price breaks above the 2,271 line and settles. Take profits near the 0.618 Fib line at $2,131.
This article is merely an explanation of what the author would do, so trade at your own risk. It is not a "recommendation" to buy or sell.
Fundamental analysis of gold (XAUUSD)
Fundamental analysis is very important in making market forecasts, especially long-term forecasts. Fundamental analysis involves a wide range of information, from economic indicators such as employment statistics, GDP, and retail sales to monetary policies implemented by central banks of each country.
From here on, we will explain the outlook for gold from a fundamental perspective.
Fundamental factors in gold prices
From here on, we will explain the outlook for gold from a fundamental perspective.
Fundamental factors in gold prices
- Increasing inflation
- Decreasing real interest rates
- Increasing geopolitical risks
- Currency fluctuations
Rising inflation rate
The first fundamental factor in the gold market is rising inflation rate.
Gold is generally considered a hedge against inflation. Therefore, as inflation accelerates, the purchasing power of currency decreases, so many people tend to invest in gold as a means of preserving value. When the inflation rate rises due to such factors, the value of gold rises.
Gold is generally considered a hedge against inflation. Therefore, as inflation accelerates, the purchasing power of currency decreases, so many people tend to invest in gold as a means of preserving value. When the inflation rate rises due to such factors, the value of gold rises.
Falling real interest rates
The second fundamental factor in the gold market is falling real interest rates. Gold is a very attractive investment when interest rates are low, as it does not generate interest or dividends.
In addition, when the real interest rate, which is the nominal interest rate minus the inflation rate, is very low, investment in gold increases and its value rises.
✅ Gold, which does not pay interest or dividends, will see an increase in demand if interest rates fall.
In addition, when the real interest rate, which is the nominal interest rate minus the inflation rate, is very low, investment in gold increases and its value rises.
✅ Gold, which does not pay interest or dividends, will see an increase in demand if interest rates fall.
Rising geopolitical risk
The third fundamental factor of the gold market is rising geopolitical risk. When there are geopolitical risks such as global conflicts and terrorism, investors generally invest in safe gold, which has less risk.
Therefore, when there is geopolitical risk, the value of gold rises.
Therefore, when there is geopolitical risk, the value of gold rises.
Fluctuations in currency value
The fourth fundamental factor of the gold market is fluctuations in currency value. Gold is generally traded in US dollars. Therefore, when the US dollar rate fluctuates, the price of gold also tends to fluctuate. This is because there is a relationship between the dollar and risk assets (for example, stocks and bonds).
Specifically, if the US economy is doing well, investors often turn to risk assets in search of higher returns, which results in an increase in the value of the US dollar. This strengthening of the US dollar tends to reduce investment in gold, leading to a fall in the price of gold.
In other words, when the US economy improves, demand for gold decreases, which results in a fall in the price of gold, making gold more volatile due to fluctuations in currency value.
Specifically, if the US economy is doing well, investors often turn to risk assets in search of higher returns, which results in an increase in the value of the US dollar. This strengthening of the US dollar tends to reduce investment in gold, leading to a fall in the price of gold.
In other words, when the US economy improves, demand for gold decreases, which results in a fall in the price of gold, making gold more volatile due to fluctuations in currency value.
For FX Gold, FxPro is recommended
We hope you have a good understanding of the characteristics of FX Gold (XAUUSD), trading methods, and points to be careful of when trading.
Gold has high volatility and stable price, so you can aim for big profits, but there are also many points to be careful of, so be sure to thoroughly manage your risks when trading.
Summary of this article:
- Forex gold refers to a contract-for-difference transaction targeting the price of gold.
- The recommended trading method for Forex gold is scalping.
- When trading Forex gold, there are three things to be careful of: there are restrictions on trading hours; try not to hold on to positions; and be careful not to leverage too much or hold on to positions for too long.
If you want to start FX trading, FxPro is the place to go!
Why Trade with FxPro?
- Broad Asset Range: Over 70 currency pairs, plus commodities, indices, shares, and futures.
- Top Platforms: MetaTrader 4, MetaTrader 5, cTrader, and FxPro’s own platform.
- Risk Protection: Negative balance protection for account safety.
- Tight Spreads: Competitive rates and deep liquidity.
- Regulated & Trusted: Fully licensed, secure trading environment.
- Fast Execution: No dealing desk, lightning-fast trades.