Glossary
Financial Education Glossary
Every term used across our articles and guides, defined in plain language. If a definition is unclear, tell us and we will rewrite it.
A
- Ask
- The price at which a seller is willing to sell an asset.
B
- Base Asset
- The first item in a pair (e.g. XAU in XAU/USD) — the thing being priced.
- Bear Market
- An extended period of broadly falling prices and weak sentiment.
- Bid
- The price at which a buyer is willing to buy an asset.
- Bull Market
- An extended period of broadly rising prices and positive sentiment.
C
- Candlestick
- A chart element showing the open, high, low, and close of one time period.
- Central Bank
- The institution responsible for a nation's monetary policy and currency stability.
- Commodity
- A basic good, such as gold or oil, that is interchangeable with others of the same type.
- Counterparty Risk
- The risk that the other party to a contract fails to meet its obligations.
- CPI
- Consumer Price Index — a common measure of consumer inflation.
D
- Demand
- Desire to buy, for gold from jewellery, technology, investment and central banks.
- Drawdown
- The decline from a peak value to a subsequent low, usually expressed as a percentage.
- DXY
- The U.S. Dollar Index, measuring the dollar against a basket of major currencies.
E
- ETF
- Exchange-traded fund: a fund whose shares trade on a stock exchange.
- Exchange Rate
- The price of one currency expressed in another.
F
- Federal Reserve
- The central bank of the United States, responsible for U.S. monetary policy.
- Fineness
- Gold purity expressed in parts per thousand, e.g. 999.9.
- FOMC
- Federal Open Market Committee — the Fed body that sets U.S. interest-rate policy.
- Forward Guidance
- Central bank communication about the likely future path of policy.
- Futures
- A standardised contract to buy or sell an asset at a set price on a future date.
G
- Gold Standard
- A monetary system where a currency's value is tied to a fixed amount of gold.
I
- Inflation
- A sustained rise in the general price level that reduces purchasing power.
- Interest Rate
- The cost of borrowing money, or the return on lending it, per year.
L
- Leverage
- Using borrowed capital to increase exposure; it magnifies both gains and losses.
- Liquidity
- How easily an asset can be bought or sold without materially moving its price.
M
- Margin
- Collateral required to hold a leveraged position.
- Market Order
- An instruction to transact immediately at the best available price.
O
- Opportunity Cost
- The return given up by choosing one option over another.
- OTC
- Over-the-counter: trading directly between parties rather than on an exchange.
P
- Position Size
- The quantity of an asset held, calculated from a predefined risk limit.
- Premium
- The amount charged above spot for coins or bars to cover fabrication and distribution.
Q
- Quote Currency
- The second item in a pair — the currency the price is expressed in.
R
- Real Interest Rate
- An interest rate adjusted for inflation: roughly nominal rate minus inflation.
- Reserve Asset
- An asset held by a central bank to back its currency and liabilities.
- Resistance
- A price area where selling interest has previously slowed or stopped an advance.
- Risk Management
- The practice of limiting potential loss through sizing, exits, and written rules.
S
- Safe Haven
- An asset some investors seek during market stress; not a guarantee of gains.
- Spot Gold
- Gold for immediate settlement, quoted as XAU/USD.
- Spot Price
- The current price for immediate settlement.
- Spread
- The difference between the bid and ask price; a cost of transacting.
- Stop Loss
- A pre-set exit level intended to limit loss on a position.
- Supply
- The amount of an asset available, for gold mainly mining and recycling.
- Support
- A price area where buying interest has previously slowed or stopped a decline.
T
- TIPS
- Treasury Inflation-Protected Securities; their yield approximates a U.S. real rate.
- Trend
- A sustained directional bias in price over a chosen timeframe.
- Troy Ounce
- The standard unit for weighing precious metals, about 31.10 grams.
U
- U.S. Dollar
- The world's main reserve currency and the currency gold is usually priced in.
V
- Volatility
- The degree of variation in price over time.
X
- XAU/USD
- The U.S. dollar price of one troy ounce of gold.