Gold Trading Basics: Key Factors Affecting Gold Prices

Why trade gold?

Gold (XAUUSD) is the most actively traded precious metal globally. It has safe-haven properties and tends to perform strongly during geopolitical tensions and rising inflation. Compared to forex currency pairs, gold has higher volatility and stronger trends, making it well-suited for swing trading.

Five key factors affecting gold prices

US Dollar Index (DXY): A stronger dollar pressures gold prices; a weaker dollar boosts gold prices. The two are negatively correlated.

Federal Reserve interest rate policy: Rate hikes favor the dollar and weigh on gold; rate cuts drive gold prices higher.

Inflation data (CPI/PCE): During periods of high inflation, gold's appeal as a store of value increases.

Geopolitical risks: Uncertainty events such as wars and sanctions drive safe-haven capital into gold.

Central bank gold purchases: Central banks in countries like China and India continue to increase their gold reserves, providing medium-to-long-term support for gold prices.

Gold trading hours

Gold is tradable 24 hours a day, but the most active sessions are the London session (Beijing time 15:00-23:00) and the New York session (20:00-3:00 the next day). These sessions offer the best liquidity and the tightest spreads.

Beginner recommendations

Start with 0.01 lots to control risk

Monitor US economic data releases every Wednesday/Friday

Use daily and 4-hour charts to determine the overall direction, and the 15-minute chart to find entry points

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Gold's intraday volatility often ranges from 100-300 pips, so always set a stop loss. Recommended stop-loss distance: 30-50 pips outside support/resistance levels.