Many traders refer to precious metals as “safe-haven” investments. During times of high volatility, increased risk, and anticipated inflation, investors often move their funds to gold and silver. It allows you to speculate on the price movements of gold or silver relative to the US dollar currency.
Precious metals (Gold and Silver) are quoted and traded similarly to our currency pairs. Precious metals include a Bid price, an Ask price, a spread, and are calculated in Pips.
Precious metal trading is over the counter, with the main trading centers located in London and New York. Liquidity in the precious metals market is often highest when European market hours overlap with New York trading hours.
Profit / Loss Calculation It is important to know how many ounces there are per 1 lot when trading precious metals. If you place a market order to buy 1 lot of GOLD (XAU/USD) at $1,550.50 per ounce, and the price increases to $1,551.50 per ounce, you actually made a profit of $1.00. Since you purchased 1 lot, you actually traded 100 ounces of Gold. Since a profit of $1.00 on 1 lot deal is equal to $1.00 x 100 = $100.