The quick answer: what is a pip worth on gold?
There is no universal definition of a pip on gold, but these are the most common conventions on CFD platforms and MetaTrader 5:
- 1 standard lot = 100 troy ounces (one troy ounce = 31.1035 g).
- 1 gold pip = $0.10 of price movement, i.e. one digit on the first decimal (2,350.10 to 2,350.20).
- 1 MT5 point = $0.01 when gold is quoted with two decimals.
- A $1.00 move is worth $100 per lot, $10 for 0.10 lot, $1 for 0.01 lot (one ounce).
These rules rest on contract size, the one number that really matters. Conventions vary by broker: some call a $0.01 move a pip, others a $1.00 move, and lot size is not always 100 ounces. Before any calculation, check the contract specifications with your broker.
Pip, point, tick, lot: definitions
| Term | Definition | Common value on XAUUSD |
|---|---|---|
| Troy ounce | The unit of weight for gold | 31.1035 g |
| Lot | Order size unit. Contract size sets the number of ounces per lot | 1 lot = 100 oz (common); 0.01 lot = 1 oz |
| Point | Smallest price change shown by the platform, depending on decimals | $0.01 with 2 decimals; $0.001 with 3 decimals |
| Pip | Conventional price-gap unit, often ten points | $0.10 (varies by broker) |
| Tick | Smallest quoting increment set by the market or contract | COMEX futures: $0.10, worth $10 per 100 oz contract |
In currency pairs a pip is 0.0001 (0.01 for yen pairs), so the notion is more standardised. For gold, it is a platform habit. The COMEX gold future, the reference for regulated markets, quotes in $0.10 steps, which is why many people equate a gold pip with $0.10.
What is a price move worth?
The one formula to remember: profit or loss in dollars = price change × number of ounces, where ounces = lots × contract size. The table applies the 100 oz per lot convention.
| Position size | Ounces | $1.00 move | $0.10 move ("pip") | $0.01 move (point) |
|---|---|---|---|---|
| 1.00 lot | 100 | $100 | $10 | $1 |
| 0.50 lot | 50 | $50 | $5 | $0.50 |
| 0.10 lot | 10 | $10 | $1 | $0.10 |
| 0.01 lot | 1 | $1 | $0.10 | $0.01 |
The value is expressed in dollars, the quote currency. On a euro or sterling account, the profit or loss is converted at the prevailing exchange rate, so the same move in gold does not always produce exactly the same amount in your account currency.
Worked examples
All prices below are hypothetical, chosen for arithmetic clarity.
- Gain. Long 0.20 lot (20 oz) opened at $2,000.00 and closed at $2,004.50. Move: +$4.50. Result: 4.50 × 20 = +$90.
- Loss. Same position closed at $1,997.00. Move: −$3.00. Result: −3.00 × 20 = −$60.
- Short position. Sell 0.10 lot (10 oz) at $2,000.00, closed at $1,995.00. Favourable move of $5.00: 5.00 × 10 = +$50. Had price risen $5.00, the loss would be $50.
To convert: a $4.50 move equals 45 pips of $0.10 or 450 points of $0.01. All three ways of describing the same move give the same result in dollars as long as you use the right unit value.
Leverage and margin: what they actually change
Leverage lets you open a position worth more than the capital set aside. That capital is the margin:
margin = price × contract size × number of lots ÷ leverage
Example: 0.50 lot (50 oz) at a hypothetical price of $2,000. Notional value is 2,000 × 50 = $100,000. At 1:20 leverage the required margin is $5,000; at 1:100 it is $1,000.
Key point: leverage does not change profit or loss per dollar of movement. A $10 move on 50 oz is worth $500 whatever the leverage. It changes the share of your capital committed: with $1,000 of margin, that $500 is half of the margin. Leverage therefore magnifies gains and losses relative to capital, and a position can be closed automatically if margin becomes insufficient (margin call, stop-out).
For retail clients, regulators often cap leverage on gold (for example 20:1 on CFDs under the European ESMA regime), which limits the position sizes available. Rules depend on client status and broker.
Spread: a cost that adds up
The spread is the gap between the buy (ask) and sell (bid) price. Every position starts with that cost: opening and immediately closing one produces a loss equal to the spread.
Example: a $0.30 spread (30 points) on 0.20 lot (20 oz): 0.30 × 20 = $6. On 1 lot the same spread costs $30. Spreads vary through the day: they are often tighter in the London–New York overlap and wider around big releases or the Sunday reopening (see gold trading hours). Depending on the broker, commissions and, for positions held overnight, financing charges (swap) may apply.
Position size and risk: the principle
A common risk management approach works backwards: instead of picking a number of lots at random, you start from the maximum loss you are willing to accept on a trade, then work out the size that fits the distance to your stop. It is presented here as an educational principle.
lots = amount at risk ÷ (stop distance in $ × ounces per lot)
Example: amount at risk $60 (an arbitrary figure), stop placed $3.00 from entry. The result is 60 ÷ (3.00 × 100) = 0.20 lot, the same case as the $60 loss above. With a $6.00 stop, size falls to 0.10 lot for the same amount at risk.
Everyone sets their own risk rule, as a percentage of capital or a fixed amount: this guide does not recommend any percentage. Keep in mind that the actual loss can exceed the planned amount in case of a gap or slippage (see weekend gaps), and that size must be rounded to the broker's volume step.
Check the contract specifications with your broker
On MetaTrader 5, right-click XAUUSD in Market Watch, then choose Specification. Check in particular:
- Contract size: ounces per lot (100 in the common convention).
- Digits: number of decimals, which sets the value of a point.
- Tick size and tick value: the minimum price step and its value in account currency.
- Minimum, maximum and step volume (often 0.01 lot).
- Margin: calculation mode, applied leverage and currency.
The same information exists at every broker, but not with the same values. The XAU Terminal Windows app connects to MetaTrader 5, and the specifications remain those of your broker.