i've been looking at / watching XAU/USD as well over the past week. i would presume that we should watch all the news, USD based as well as CAD and AUD and EUR and whatnot - or at least be aware of when any particular piece of news is scheduled for.
gold is quoted in dollars per ounce (for example, 1558.35), and you buy/sell one ounce increments. there are no pips, just dollars and cents. the spread i'm seeing is typically 35 cents (which is 3500 pips, which is why we don't bother looking at pips), and the daily trading range (low to high) is around $2 (sometimes a bit more, like $3-$5).
it appears to me that trading gold (XAU/USD) is much more like buying and selling shares of Apple or Alcoa (as far as how the numbers work) as opposed to converting between world currencies.
Gold is pretty sensitive to general worldwide economic data that has a high importance. It's part of the risk on / risk off trade. So if risk is off for the day that tends to result in USD getting stronger and Gold weakening. However you also have to factor in the possibility of QE3 - previous bouts of quantitative easing by the Fed were a major factor in the price of Gold rocketing up towards $1,900 last year as people bought it as a hedge against inflation due to money printing and there was also a ton of fast money speculation naturally. If the economic situation continues to worsen the Fed had signalled that they're ready to start QE3 so there's those that might see risk off and a pullback in Gold as a chance to start building or adding to their existing long position. They're speculating that the Fed will kick off QE3 in the next 3-6 months and that Gold will take another leg up. For me they're the two main drivers of the price of Gold currently.
So you pays your money and takes your chances with Gold. It's a pretty volatile market. Average True Range is about $20 per day but you can have days where it moves $50+. It's also somewhat open to manipulation by large players compared to far more deep and liquid markets like E/U so there will be times that Gold gets a beatdown for no apparent reason or around option expiry dates, rollover dates, etc. Given the potential for volatility I'd recommend trading the edges of ranges as much as possible so you can keep your stops reasonable.
If you trade Gold on Oanda the smallest you can trade is about $1 move in Gold equates to about $1 for your account.
Pipbandit - I agree, I have a holding of the physiscal stuff - 56oz - bought in Oct 2009 - i used to watch its price about every hour of every trading day - but I don`t bother now. I`m confident in the long term (3-5 years?) that its going to give me a good return - or I should say increase the % gain I already have - Its my pension!!
I also trade it short term on MT4 - only at a couple of micro lots - but over a couple of days it can win - or lose - you a couple of hundred dollars.
Long term lack of confidence in USD as the safe haven & QE3 will have the impact
I agree with the PipBandit that the implementation of the QE3 would make the Gold rallying.There is a close correlation between the EUR/USD and the Gold but due to the worsen situation in the Euro zone the Gold has started fading this correlation.I am pretty sure that the Bernanke will implement the QE3 in the upcoming months and there will be a long term risk sentiment in the market,people will buy Gold as a hedge,Euro and commodity dollars will rally and we will see a big change in the markets.
Yes,we have to keep a close eye on the economic data released by the Euro zone and USA.Sometimes it happens that the data released by the Euro and the USA is so bad the the investors starts investing in Gold which makes the Gold rallying and sometimes in the risk-off environment Gold and Euro are sold-off.So,we have to work with patience and we should observe that in which direction the market is taking this fundamental event?
I think that there is a very little concept of pip while trading Gold.Gold is always traded in Troy ounces so we buy/sell (x) number of troy ounces of Gold and our profit/loss is calculated on this basis.Anyway,you may contact you the broker to provide you with the spread sheet of all the currencies pairs and commodities as it would be very helpful to you.