XAU/USD is the most quoted gold price in the world, and it is also one of the most misunderstood. This page breaks the symbol down into its four practical parts: what the quote means, the unit it is priced in, what a pip and a lot are worth, and how leverage turns a small deposit into a large exposure.
Every currency pair has a base and a quote currency. In XAU/USD the base is XAU, the ISO 4217 code for one troy ounce of gold, and the quote currency is the US dollar. The number on the screen is therefore the price of one ounce expressed in dollars. If the quote reads 2,650.00, one ounce of gold costs 2,650 dollars.
Two details are easy to miss. First, the unit is a troy ounce, which is 31.1035 grams — about ten percent heavier than the everyday avoirdupois ounce used for food and postage. Second, XAU/USD is a spot price: it represents gold for delivery in two business days, not a futures contract with an expiry date. Spot gold trades nearly around the clock from Monday morning in Asia to Friday evening in New York, and it is quoted by a network of banks and brokers rather than on a single exchange.
That last point has a practical consequence. There is no official closing bell and no single last price, so different venues can show slightly different quotes at the same moment. The price you see on one platform may differ from another by a few cents, and that difference is normal rather than an error.
Gold is quoted to two decimal places on most retail platforms, and each 0.01 step is one cent per ounce. The gap between the bid and the ask is the spread, which is the cost of entering a trade; on gold it is usually quoted in cents, so a spread of 0.30 means thirty cents per ounce.
| Price move | Value per ounce | Value per 100 oz |
|---|---|---|
| 0.01 (one cent) | $0.01 | $1.00 |
| 0.10 (ten cents) | $0.10 | $10.00 |
| 1.00 (one dollar) | $1.00 | $100.00 |
| 10.00 | $10.00 | $1,000.00 |
That table is the whole arithmetic of gold trading. Everything else — pips, lots, profit and loss — is a multiple of it.
In foreign exchange a pip is the fourth decimal place, but gold does not follow that convention. The market standard is that one pip equals 0.01 in the XAU/USD price, matching the last decimal on the quote. On a standard contract of 100 ounces, one pip is therefore worth exactly one dollar.
Be careful here, because terminology is not fully standardised. Some brokers and many educational sites call a 0.10 move a pip, which makes a pip worth ten dollars per standard lot. Neither convention is wrong, but mixing them up produces position sizes that are out by a factor of ten. The number that actually matters is the contract size, not the label: value per point = price move × ounces held.
The gold pip and profit calculator does this conversion for any entry, exit and lot size, which is faster and safer than doing it in your head at the moment you click.
A lot is simply a standardised quantity. In spot gold the conventional sizes are:
Notional value is the number people forget. A single standard lot is a quarter of a million dollars of metal, and a two-dollar move — entirely routine in gold — is 200 dollars. Size the position in ounces first and let the platform translate it into lots, rather than choosing a lot size because it looks modest.
Leverage lets you control a position larger than your deposit by posting only a fraction of its value as margin. At 1:100, a 100-ounce position at 2,650 requires about 2,650 dollars of margin instead of 265,000. The rest is borrowed exposure, and it is charged for in the currency of risk rather than in interest.
This is why stop-out levels exist. When equity falls below a percentage of the required margin, the platform closes positions automatically, often at the worst possible moment. The defence is not a tighter stop alone but a smaller position: at 1:20 effective leverage the same 13.25 dollar move costs a tenth as much of the account.
Leverage also interacts with the spread and with overnight financing, both of which are charged on the full notional rather than on the margin. A position held for weeks can quietly cost more in financing than the move it was designed to capture.
Futures trade on an exchange with a fixed expiry, standard contract sizes and central clearing. Spot gold, which is what XAU/USD represents, trades over the counter, has no expiry and is priced continuously. Retail traders usually prefer spot because positions can be held without rolling, sizes are flexible and the minimum ticket is small. The trade-off is counterparty exposure to the broker rather than to a clearing house, which is why regulation and segregation of client funds matter more in spot than in futures.
XAU/USD is dollars per troy ounce. One pip is usually 0.01, worth one dollar on a 100-ounce lot. A lot is 100 ounces, so a standard position is a very large notional amount. Leverage shrinks the deposit required but not the risk, because profit and loss are always calculated on the full contract. Get those four numbers straight and the rest of gold trading becomes arithmetic rather than guesswork.
XAU is the ISO code for one troy ounce of gold and USD is the US dollar, so XAU/USD quotes how many dollars buy one ounce for immediate delivery. A quote of 2,650.00 means one ounce costs 2,650 dollars, and a standard 100-ounce lot is worth 265,000 dollars.
With the usual two-decimal quote one pip is 0.01, worth 1.00 dollar on 100 ounces, 0.10 on a mini lot and 0.01 on a micro lot. Some platforms call a 0.10 move a pip instead, which would make it ten dollars per standard lot, so check the contract specification before you size a trade.
Because gold moves several dollars on an ordinary day and that is a large fraction of a small margin deposit. At 1:100 a 100-ounce position needs roughly 2,650 dollars of margin, so a 26-dollar adverse move costs about ten percent of the margin. Leverage magnifies the account impact of a move; it never magnifies the move itself.
Trading on the spot gold price carries risk of loss. This page is educational and is not investment advice.