What Is XAU and How Is It Used in the Financial Markets?

XAU is the symbol for the precious metal gold, used in many financial markets and digital instruments. It is often referred to as “spot gold” or simply spot because it refers to physical gold traded through an exchange, rather than a futures contract with a set delivery date.

Gold has been used as a form of currency for thousands of years and continues to be highly sought-after to this day—primarily due to its relatively consistent value across cultures and nations.

In the financial markets, investors can potentially use XAU as a safe haven during periods of extreme market volatility or economic uncertainty. This is because the price of XAU usually remains steady due to its limited supply and strong demand.

» Learn about gold CFD trading for beginners

Why Consider Adding XAU to Your Account?

Traders could potentially benefit from the stability of gold prices, as they are less likely to be affected by market volatility and economic uncertainty. Gold has long been used as an inflation hedge against other forms of currency.

Advanced traders can also make use of gold's low correlation with other financial instruments, such as stocks and bonds. In addition to being able to leverage its price movement within the markets, experienced investors could find creative ways to incorporate gold into their accounts for diversification purposes.

However, it's essential to keep in mind that no forms of trading are guaranteed and that the risks must always be considered. It's essential to have a risk management strategy in place along with your overall plan before you begin trading.

» Ready to trade gold? Learn more about opening an account with Fortrade