Position Sizing for Gold (XAU/USD)
Gold is quoted in dollars, not pips
The first thing to unlearn is the word "pip". On EUR/USD a pip is 0.0001 of price. On gold, price is quoted directly in US dollars per ounce — 2,650.00 — and the smallest increment brokers normally quote is 0.01, which is one cent of an ounce. That is the unit the arithmetic runs on here.
The second thing is the contract. On spot forex a standard lot is 100,000 units of the base currency. On gold in this tool's reference data, one contract is 100 ounces. Those two facts together fix every number that follows:
So a gold trade that moves ten dollars against you costs 1,000 USD per full contract. At 0.10 lots — ten ounces — the same move costs 100 USD. The scale is much steeper per lot than forex, and that is the whole reason gold sizes look unusually small.
What a move costs at each position size
The table below is for XAU/USD on a USD-denominated account, at one contract = 100 ounces. It is arithmetic on the contract size above, not a quote from any broker.
| Lots | Ounces | 0.01 move | 1.00 move | 10.00 move |
|---|---|---|---|---|
| 0.01 | 1 oz | 0.01 USD | 1.00 USD | 10.00 USD |
| 0.10 | 10 oz | 0.10 USD | 10.00 USD | 100.00 USD |
| 1.00 | 100 oz | 1.00 USD | 100.00 USD | 1,000.00 USD |
| 10.00 | 1,000 oz | 10.00 USD | 1,000.00 USD | 10,000.00 USD |
One full contract is not a beginner size. It is a position that gains or loses a hundred dollars for every single dollar gold moves, and gold routinely moves ten to twenty dollars in a session.
The formula, in gold terms
The formula is the same one used everywhere else on this site. What changes is only the units it produces.
There is no pip conversion and no quote-currency rate for XAU/USD on a USD account: entry, stop and spread are all already in dollars, and the answer comes out in ounces. Divide by the contract size to get lots — 100 ounces to a contract in this reference data.
The result is then rounded down to the minimum step. Here the step is one ounce, which matters more than it sounds, and the next section shows why.
Worked example
Account 10,000 USD, risk 1% (100.00 USD). Gold is at 2,650.00 and the stop sits at 2,642.00, eight dollars away. The broker's spread on gold is 0.40, so the effective distance to the stop is 8.40.
- Effective stop distance: 8.00 + 0.40 = 8.40 USD.
- Ounces: 100.00 / 8.40 = 11.90 ounces.
- Round down to the step: 11 ounces = 0.11 contracts.
- Worst case at the stop: 11 x 8.40 = 92.40 USD. Inside the 100.00 budget.
| Including spread | Ignoring spread | |
|---|---|---|
| Ounces computed | 11.90 | 12.50 |
| Tradable after rounding down | 11 oz | 12 oz |
| Actual loss at the stop | 92.40 USD | 100.80 USD |
| Against a 100.00 budget | under by 7.60 | over by 0.80 (+0.8%) |
The spread is not a rounding detail on gold. Gold spreads are wider than major forex pairs and they widen further around data releases, so a distance that is eight dollars at midday can be twelve dollars at the open. Recompute when the spread moves, or size against the wider of the two.
Note also how coarse one-ounce steps are at this size: 11 and 12 ounces are a nine percent difference in exposure, and there is nothing in between. On a larger account the same step is invisible. On a small one it is the whole trade — the small account guide works through that problem.
Why gold sizes look so small next to forex
Because the contract is 100 units instead of 100,000. A forex standard lot is six figures of currency; a gold contract is two figures of metal. The dollar risk per unit of price is what makes them comparable, and gold carries far more of it: a 1.00 move on gold costs 100 USD per contract, while a comparable 100-pip move on EUR/USD costs 1,000 USD per standard lot — but a 100-pip move is a large forex day, and a 1.00 move in gold is an ordinary one.
- Do not reuse a forex lot habit. "One lot" means a hundred ounces here, and it is a large position.
- Contract specifications vary by broker. This reference data uses 100 ounces per contract with a one-ounce step. Some brokers offer a 10-ounce mini or a 1-ounce micro, and some express gold in different units entirely. Check yours before trusting any number produced here.
- Silver is not gold. In the same reference data, XAG/USD is 5,000 ounces per contract with a 0.001 tick, so a 0.001 move is 5.00 USD per contract. Different scale, different arithmetic, same formula.
- Gold gaps. A stop that is eight dollars away is not a guarantee of an eight-dollar loss. Weekend gaps and news spikes can exceed it, and no position size protects against that.
Checklist before the order
- Confirm the contract size and the minimum step your broker actually uses for XAU/USD.
- Use the live spread, not the typical one, in the stop distance.
- Round the ounce count down, never up, and recheck the worst-case loss against the budget afterwards.
- Recompute if you move the stop. The ounce count changes with the distance, not with your conviction.
Related guides
- How to calculate position size in forex — the same formula where pips and quote rates do apply.
- Position sizing on a small account — what to do when the minimum step is bigger than your budget allows.
- Lot sizes explained — standard, mini, micro and nano lots.
- Reference data — the contract specifications table this page uses, downloadable as CSV.