Page 20 - WHAT IS FOREX (2)_Neat

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Gold, traded as XAU/USD, is quoted differently than regular

currency pairs-usually with two decimal places (for example,
2345.50).This means its pip value is not 0.0001 like EUR/USD,

but instead 0.01.

In simple words:

1 pip in gold = 0.01 in price movement.

Example 1:

If XAU/USD moves from 2345.50 → 2346.50,the difference is
1.00,which equals 100 pips. So, 0.01 = 1pip and 1.00 = 100 pips.

Example 2: Profit Calculation

Let’s say you buy 1 lot of gold (XAU/USD) at 2345.00 and sell it at
2346.00.That’s a move of 1.00 = 100 pips.

If your broker defines:
● 1 lot = 100 ounces of gold

● 1 pip = $0.10 per 0.01 movement

Then your profit will be approximately:

100 pips × $1 = $100 profit (depending on broker contract size)

2. Spread / Commission