Gold is the world's oldest mode of exchange. With a bright and glossy appearance, gold is not only visually attractive but also has exceptional uses. Gold is regarded both as a long term investment and as a short term hedge in times of uncertainty or anxiety in the markets. Gold prices therefore usually display enhanced volatility during political or economic uncertainty as investors increase gold's demand due to its global acceptability. In the forex world, the XAU/USD pair is the abbreviated term depicting gold and the US dollar, also named as the precious metal, yellow metal and bullion. It’s a spot commodity based on the price of gold and traded against the US dollar. Previously, gold was used as a standard for monetary exchange as well. This practice was stopped with the introduction of the fiat system in the US in 1971.

Breaking Down "XAU/USD" COMEX Division Spot gold and futures offer an essential alternative to conventional means of investing in gold such as coins, bullion and mining assets. Gold futures contracts are valuable trading tools for institutional investors and independent forex traders. For day traders, an electronically traded fund (ETF) based on several aspects of gold's valuation is excellent for engaging the marketplace on a short-term basis. Gold futures offer hedgers and speculators an ability to transfer the rights to various quantities of gold without having to worry about providing delivery. Therefore, the appetite of forex traders to settle the trade in cash ensures high levels of ongoing liquidity until the contract's expiration date.