XAU/USD Explained: How Gold Trading Works in Forex

At a glance

Troy ounce

≈ 31.1035 grams

Common lot size

100 oz (varies)

$1 move on 1 oz

$1

Max retail leverage, UK and EU

20:1 (Oct 2026)

What is XAU/USD?

XAU/USD is the price of one troy ounce of gold in US dollars. The international gold market quotes prices in dollars per ounce, and trading platforms show that price as XAU/USD. XAU is gold’s code in the ISO 4217 list of currency codes, which is why gold is written and traded like a currency pair: how to read currency pairs.

At XAU/USD 2,400 (an illustrative price, not a current one, used in all examples on this page), one troy ounce of gold costs $2,400. If the price rises, gold has gained value against the dollar.

How many grams is a troy ounce?

The troy ounce used for precious metals is exactly 31.1034768 grams. The everyday (avoirdupois) ounce, about 28.35 grams, is not used for gold prices. To convert a price per ounce to a price per gram, divide by 31.1034768: at $2,400 an ounce, gold costs about $77.16 a gram.

How does gold trading work on a forex platform?

On most forex platforms XAU/USD is a CFD or a spot contract on the gold price: you do not take delivery of gold, you gain or lose the price difference between opening and closing the position: what is a CFD. You can go long if you expect the price to rise and short if you expect it to fall: long and short positions.

Contract size. The number of ounces in 1 lot is set by the broker. Many use 1 lot = 100 ounces, so 0.10 lots is 10 ounces and 0.01 lots is 1 ounce, but some use other sizes. Check the contract size in the symbol specification: contract size.

P/L ($) = (closing price − opening price) × ounces held · ounces held = lots × contract size (reverse the sign for a short position)

A 0.10-lot gold trade

Assumptions: US dollar account; contract size 100 ounces per lot (it differs between brokers); 0.10 lots (10 ounces) bought at 2,400.00 and closed at 2,410.00; spread, commission and swap excluded.

• Price change: 2,410.00 − 2,400.00 = $10 per ounce.
• Profit: $10 × 10 ounces = $100.
• If the price had fallen to 2,390.00 instead, the loss would have been the same $100.

To size a gold trade from the amount you are willing to risk: gold and indices lot size calculator; profit on gold and indices: profit calculator.

Pips and points. Gold is usually quoted to two decimal places, and there is no single convention for what a “pip” is: brokers and platforms variously call $0.01 or $0.10 a pip or a point. Working in dollars per ounce, as in the example, avoids the confusion.

What is the LBMA Gold Price?

One of the main international benchmark prices is the LBMA Gold Price, set in US dollars twice each London business day in electronic auctions starting at 10:30 and 15:00 London time and run by ICE Benchmark Administration (IBA). It is used as a reference in contracts and valuations; the XAU/USD price on a trading platform changes continuously during the trading day.

XAU/USD costs, leverage and risks

• Spread: the gap between bid and ask can widen around major data releases, at the daily open and when liquidity is thin: what is a spread in forex.
• Swap: positions held past the daily rollover are charged or credited a swap set by the broker: what is a swap in forex, swap calculator.
• Leverage: in the UK and EU, retail leverage on gold CFDs is capped at 20:1; elsewhere caps depend on the country and on the broker entity serving you, and offshore entities may offer much more (October 2026): what is leverage in forex.
• Volatility: the gold price can move sharply around major economic data and in periods of global uncertainty, and stops can fill at worse prices in fast markets. Size each trade from the stop distance: position sizing, volatility.
• Trading hours: gold trades almost 24 hours a day on weekdays, but platform hours, including a short daily break, differ between brokers: forex market hours.